Credai apr jun'13 by alarinks

April-June 2013

Complimentry copy not for sale

REAL Unleashing the

power of Eastern NCR

Need of the hour

Affordable housing

credai.org

editor’s letter

Welcome!

t is a known fact that the real estate sector in India is growing like never before. While more and more development is coming up with each passing day in almost all over the country, a shift in locational concentration of commercial real estate to peripheral regions from central locations has also been observed. But we strongly feel the potential of real estate sector and its contribution to the nation’s GDP has not been projected to our developer community. In fact, the real estate fraternity does not realise the immense contribution it has made in generating revenue, creating employment and helping in urbanisation of our country. I want to share that our sector is performing better and has been surpassing the amount of revenue and employment generated by the other so-called “patronised” sectors. Our initiative of Credai Times, the third after we went in for a revamp, works at further connecting the sector by informing the associates of the developments and trends that are taking place. So far I feel that we have not been able to attract the attention of the Government and policy-makers towards this vital contribution made by the real estate sector. To throw light on the same, in this issue, we have attempted a series of articles starting with the eastern region of NCR Delhi -- Noida, Greater Noida and Ghaziabad -- with a market size of three lakh crore. We plan to cover other locations/ markets in our upcoming issues, culminating the report at a national level. I hope our fellow member developers and stakeholders will find this informative and useful. We are also happy to announce that Credai Times is finding many more advertisements and has witnessed an increase in circulation over the last few issues. I, along with my editorial team, am thankful to all our developer friends who have appreciated the new look of the magazine. With this, I request that everyone associated with CREDAI should utilise this platform to the fullest by sending information regarding their activities and agenda and we will try to give it appropriate coverage in the magazine. I also want to take this opportunity to congratulate the new national team at CREDAI and hope they have successful stints in their respective regions.

Srivastva is the managing director of Assotech Limited. He is B Tech (Civil Engineering) from NIT Calicut and is based out of Noida (UP).

credai.org

Sanjeev Srivastva

Editor-in-chief sanjeevsrivastva@assotechlimited.com

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CREDAI Times is printed and published by Vikas Johari on behalf of MaXposure Media Group India Pvt. Ltd. (MMGIPL) for CREDAI and published at MMGIPL,Unit No. F2B, Second Floor, MIRA Corporate Suites, Plot No. 1&2, Ishwar Nagar, Mathura Road, New Delhi 110065, India. CREDAI Times is published four times a year. All rights reserved. the writing, artwork and/or photography contained herein may not be used or reproduced without the express written permission of MMGIPL. MMGIPL does not assume responsibility for loss or damage of unsolicited products, manuscripts, photographs, artwork, transparencies or other materials. The views expressed in the magazine are not necessarily those of the publisher or CREDAI. All efforts have been made while compiling the content of this magazine, but we assume no responsibility for the effects arising there from. FOR INQUIRIES | MMGIPL Tel: +91.11.43011111, FAX: +91.11.43011199 www.credai.org www.maxposure.in

Credai Times

Lalit Kumar Jain

Chairman, CREDAI National

Credai Times

President’s message

Chairman’s message

Dear friends, I extend my sincerest gratitude for instilling your confidence in me and selecting me as the chairman of the Confederation. Over the past couple of years, CREDAI has come a long way in convincing the Government at the Centre and also in the states that the real estate players are desirous of working along with the Government to overcome the shortage of housing in the country. Housing that needs to be affordable, accessible and which provides peace of mind to the end-users. Simultaneously, CREDAI has recommended reforms that have to be adopted and implemented by the Government without which the housing sector will not be able to gain impetus for growth. CREDAI’s presence on almost every taskforce and committee constituted for real estate sector by the concerned ministries and departments has proven to be beneficial for defining and drafting policies for the sector. Although a lot has been done, still lot more has to be accomplished. CREDAI is working closely with the Government and is lending all possible support in terms of data and research, facts and figures and probability pertaining to the success of any model act or draft guidelines. We, at CREDAI, are committed that in near future, the environmental issues will be addressed as a lot of sensitising has already taken place and streamlining will be ensured. I am sure the new team that has taken over office at CREDAI has the mettle to carry out all duties to the best of their potential. However, the aggression as was displayed in the previous couple of years will continue. The entire leadership constitutes of learned, skillful and resourceful personalities who are willing to invest their time and energy for the cause of the sector. CREDAI will continue to voice the concerns and issues of the real estate sector and we are sure that it will guide the fraternity through tough times. Thanking once again and wishing good luck to all.

Dear members, At the outset, I extend my sincere regards to all of you for having elected me as the Confederation’s president for 2013-2015. I assure you that I shall sincerely fulfill all responsibilities entrusted to the post, shall relentlessly strive to carry forward the good work done in the past at CREDAI and take all necessary steps and initiatives for ensuring the healthy growth of the real estate sector. With the support of my team, we will keep the flag of CREDAI flying high. Friends, the real estate sector has been on a fast growth track for the past few years and is making substantial contribution to the Indian economy in terms of employment generation, accrual of investment, contribution to exchequer, output trends, linkage industries etc. CREDAI’s platform is important to maintain the momentum of growth in the real estate sector. I may emphasise that everyone of us, in our own capacity, have to make the necessary efforts for taking our “Mission Transparency” forward and bring respectability to the real estate sector. Please remember that we are being watched, by the policy-makers, by our clients and investors and all others who have a stake in realty industry. What we say, we have to deliver and see that it is being followed by everyone in our organisations, whether it is our business organisations or associations at city and state levels. My appeal to all our members is to maintain best and fair practices in whatever we build, develop, transact, and in this regard, set examples for others to follow, be the pillars of integrity, maintain our dignity and esteem and never allow or tolerate unscrupulous practices in our transactions and developments. We have made a beginning in this direction with CREDAI’s self-regulation through its Code of Conduct which needs to be religiously practiced and our Consumer Redressal Forum needs to be managed well and become effective. I request your continuous support and encouragement in this regard. Please do not hesitate to express yourself by submitting your opinions in the form of recommendations and suggestions to CREDAI National Secretariat to ensure we perform better and with regard to any issues related to real estate sector. With best wishes and warm regards

C Shekar Reddy

President, CREDAI National

contents INSIDE

CONCERN Time to set real estate sector free from the clutches of taxes

National news

CREDAI chapter news

110

International news

126

Events

128

Panipat

Sonepat Baghpat

Rohtak

Jhajjar

Meerut

Ghaziabad

Gurgaon

Gautam Buddha Nagar

faridabad

Bulandshahar

Rewari

Mewat

Alwar

CAREER Renewed academic focus in real estate

49 40

STUDY Unleashing the REAL power of Eastern NCR

REAL TALK Are we heading towards an urban mess?

ENVIRONMENT Is imposing a ban on groundwater extraction justified?

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TRENDS Affordable housing is the need of the hour

FUTURE FDI in real estate works wonders for the sector

104

TECHNOLOGY Changes brought about by technology in real estate sector

120

DEVELOPMENT Property market witnesses upward swing in summer

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concern

Set realty sector free from

X a t

clutches of taxes Despite contributing around 5 per cent to the nationâ&#x20AC;&#x2122;s GDP, the real estate sector is overburdened with a plethora of taxes, says Vivek Shukla

The policy planners of the country have no time to look into the tax-related issues of the realty sector

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t present, the Indian real estate sector pretty much mirrors the state of the country’s economy. The sales have dropped, margins are under pressure and both high interest rates and fund availability are witnessed as big stumbling blocks. Notwithstanding the fact that the real estate sector contributes close to 5 per cent to the Gross Domestic Product (GDP) and it is overburdened with a plethora of taxes. Perhaps the policy-

planners of the country have no time to look into tax-related issues of the realty sector. As it is facing the heat of various taxes, the mandarins of North Block, the office of Union Finance Minister P Chidambaram, should wake up and address their concerns and issues sooner rather than later. One of the main taxes that has made it tough is the service tax which is a huge issue for the real estate sector. The service tax issue as to whether the booking of the residential/commercial unit by a prospective buyer during the construction of the residential or commercial complexes would attract the levy of service tax under the relevant taxable category viz ‘Construction of Complex Service’ or ‘Commercial or Industrial Construction Service’, has always been a thorny and contentious one ever since the levy of service tax was introduced on these two services. Here, it may be clarified that the contractor engaged by the builder for the purpose of construction of commercial or residential complex became liable to pay the service tax under the relevant taxable category depending upon the nature of the contract between the builder and the said contractor. The dispute was only in respect of the liability of the builder to pay the service tax in respect of the sale of a unit during construction to the prospective buyer. “I strongly feel that the Government must act fast to solve this issue in consultation with the real estate players. Moreover, the sale and purchase of property should not come under the service tax category,” says Neeraj Gulati, managing director, Assotech Realty. Meanwhile, Union Finance Minister created a scary situation for the real estate sector when he proposed to levy 1 per cent tax deduction at source, or TDS, on properties sold for over `50 lakh. Immediately after P Chidambaram proposed this, the shares of realty firms crashed on fears that the demand for homes in metro cities will witness a slowdown. This will increase the price of residential properties. The shares of the

TAX AND REGULATORY ENVIRONMENT Over a period of time, the tax and the regulatory environment in the real estate sector have assumed much importance for businesses in India. The construction industry is already subject to a number of taxes and is considered as one of the overburdened tax segments. The companies involved in this segment are of the general opinion that there should not be any further imposition of any levy in any form in this particular sector of the economy. Any further tax burden on this sector would affect the orderly growth and development of the real estate sector. Major recommendations from industry members are: Imposition of Service Tax: Service tax in relation to construction of residential complexes having more than 12 houses has been imposed. However, no rational has been provided for exclusion of services in relation to construction of residential bungalows which may not form part of a ‘residential complex’. There seems to be no plausible rationale for taxing a residential complex and not construction of a bungalow which may entail a higher cost of construction in many cases. Further, no rationale has been provided for the threshold of 12 dwelling units in a residential complex. Service Tax should not be imposed in the case of construction industry as this industry is already paying a number of taxes on different inputs purchased for constructing the houses in addition to taxes such as Works Contract Tax (WCT). Value Added Tax (VAT): VAT has been introduced in 20 states. Other states should also put the system in place as soon as possible. This would help in the free movement of goods across all the states. It is a well-known fact that the system is beneﬁcial to all stakeholders - consumers, manufacturers, the state and Central governments. Moreover, it is important that the concerns of traders and the corporate sector should be resolved. For the successful implementation of VAT, it is important that there should be uniformity in rates, rules and regulations across all the states. Not only do the rules vary from state to state but so do the regulations and the procedures. There is an urgent need to abolish CST, as VAT and CST cannot go hand in hand. It is important that local levies be completely abolished from all the states. Allowing of credit for interstate transfer should be brought in at the earliest. Free Trade Agreement (FTA): The Government may consider signing up of more FTAs with other countries in the interest of the real estate segment. However, while doing so the interest of domestic players in that particular segment should also be kept in mind. Form C: Uniformity regarding permission to issue a Form- C for the purpose of purchasing the goods to be used in the works contracts. The state governments should abide by the Central laws regarding the issuance of Form-C. Central Sales Tax (CST): According to the CST norms, the sale deﬁnition includes works contract. Hence, any goods moving from one state to another for the purpose of usage in execution of works contract now falls under the ambit of inter-state works contract and the state from which goods move is liable to impose a tax. Incidentally the trader ends up paying tax in the state from which the goods moved, on the same item the tax has already been paid in the place where the execution of the contract has taken place. This portrays a dichotomy in taxation. The actual legal position is that the trader need not pay the tax in the state where the work contract is executed on inter-state purchases. Excise Duty on Immovable Property: Excise duty should not be levied in the case of Immovable property like in the case of Installations such as lifts among others. The present norm that the goods cleared under CKD would have to pay excise duty should be done away with.

Credai Times

Analysts fear property transactions in Delhi-NCR and Mumbai may see a further fall, hitting the already struggling sales

Credai Times

country’s largest real estate company DLF BSE-1.30 per cent plunged 6.25 per cent to close at `259 and the benchmark index for real estate sector, BSE Realty Index plummeted 3.93 per cent to close at 1931. The Union Budget of 2013 has had the opposite effect on real estate sector which is already facing a severe slowdown. In fact, the FM has made life more difficult for the real estate sector by raising the service tax to 3.7 per cent as against the earlier 3.09 per cent if the house is worth more than `1 crore or the area is over 2,000 sq ft. Then, excise duty on marble has been increased from `30 per sq ft to `60 per sq ft, no “infrastructure” status has been given to the real estate sector which would have, in turn, enabled the real estate companies or builders to get sops like

cheaper loans from the Government or the banks. The only “benefit” the Budget has for a buyer is an additional `1 lakh deduction for interest payment on a first time housing loan but here too, the catch is that loan amount needs to be less than `25 lakh. Analysts fear property transactions in Delhi-NCR and Mumbai may witness a further fall, hitting the already struggling sales. “The levy of 1 per cent TDS on property value exceeding `50 lakh will curb movement of black money within the real estate sector,” said Alimuddin Rafi Ahmad, managing director, ILD Developers. “To avoid TDS, property transactions may see a spurt till May 31, 2013, as new tax law gets into effect from June 1, 2013,” shared Dr Devinder Gupta, MD of realty advisory, Century 21 DGS. The service

tax abatement on flats with carpet area of 2,000 sq ft or more, or value of `1 crore or more, has been reduced to 70 per cent from 75 per cent. This means real estate developers, who were paying 12.5 per cent service tax on 25 per cent

Credai Times

of the value, will now have to pay for 30 per cent of the value. “The effective service tax rate for real estate companies will increase by 62 basis points to 3.7 per cent of the property value. The real estate companies may choose to pass on this

extra tax burden to customers,” said noted Delhi-based consultant SK Gambhir. Experts also say the demand for super-premium properties may also get impacted after the Government proposed a 10 per cent surcharge on individuals who

earn yearly income of more than `1 crore. A proposal to double surcharge to 10 per cent for companies whose taxable income exceeds `10 crore will hit real estate developers. “The tax surcharge is seen as negative for real estate companies, the effective corporate tax rate will increase by 154 basis points to 33.99 per cent from 32.44 per cent,” said Gambhir. Under lot of stress due to tax related and other issues, Nikhil Jain,CEO of Ramprastha Builders, says that due to lack of regulations and effective policies, the sector is experiencing many challenges on its growth path. The Government must consider the fact that the Indian real estate sector generates countless jobs across its various verticals. By granting it industry status, the Government will enable it to access loans at lower interest rates and collateral values. The sector has been going through a difficult phase with several builders facing liquidity crisis. Some have even defaulted on debt. “I strongly feel that our otherwise vibrant and thriving real estate sector currently pretty much mirrors the state of the economy. Sales have dropped, margins are under pressure and both high interest rates and fund availability are stumbling blocks. But the opportunity is immense if the Government gives a much-needed fillip to the construction industry,” says Sanjay Khanna, director, Kailash Nath Projects, adding , “A key demand of real estate companies has been that tax breaks under Section 80-IA of the Income Tax Act, so far given to infrastructure companies, should be extended to the housing sector. Under this rule, infrastructure companies are entitled to a 100 per cent tax holiday for 10 years.” “It goes without saying that extending tax breaks to realty companies will help push affordable housing projects which has been a key agenda for the Government. Given that slums in cities are only expanding, there is an urgent need to address this segment of the housing sector. Clearly, this is one area where the government and housing companies can work together

It goes without saying that extending tax breaks to realty companies will help push affordable housing projects which has been a key agenda for the Government

Credai Times

CREDAI has pitched for an inclusive policy and special housing zones to boost affordable housing

Credai Times

under public-private partnership model,” feels Gaurav Mittal, managing director, Gurgaon-CHD Developers. “Tax burden apart, the high cost of finance through successive increases in bank rates over the last three years, reduced liquidity and a more congenial environment for foreign direct investment or FDI into the sector are areas that the Government can look into,” says realty consultant and chairman, Knight Frank India, Pranab Datta. Meanwhile, credit to commercial real estate (by banks) has gone down by more than 13 per cent and priority lending to the housing sector by 1.29 per cent. The total lending to the commercial real estate is a mere 4 per cent,” says Gupta. On its part, CREDAI has pitched for

an inclusive policy and special housing zones to boost affordable and small houses. The developers’ apex body has appealed to the Union Finance Minister to initiate widespread tax incentives for making real estate the new growth engine of the economy. CREDAI has suggested the FM allows tax exemption for small houses of under-60 sq m carpet area and creating special housing zones with tax exemptions on the lines of SEZs for constructing 45 sq m houses for low income groups and 30 sq m houses for the economically weaker sections. All said and done, it is high time that the big bosses of the Finance Ministry sitting inside the grand building designed by master designer Edward Lutyens free the realty sector from the vice-like grip of taxes.

career

Positive step in right

direction

Indian real estate sector now has a renewed academic focus to it which is being looked up as a major step by industry professionals

Indian real estate sector now has a renewed academic focus to it which is being looked up as a major step by the industry professionals

eal sector in India is transforming at a rapid pace and with it are changing the concepts and perceptions about this important segment of Indian economy. With a number of international players entering the sector lately, loads of professionalism has slowly but steadily been introduced to it. Higher transparency and best practices are the order of the day as real estate developers and promoters are opening up to this fast-evolving market dynamics. Professionals possessing the right know-how, professionalism and training are in high demand and are being paid correspondingly. In fact, Indian real estate sector now has a renewed academic focus to it which is being looked up as a major step by the industry professionals. A number of real estate courses aiming to equip students with requisite knowledge to offer them an edge over others have been introduced by various educational institutions. However, academic learning requires to be backed

Credai Times

by hands-on and practical experience to reap rich benefits for future. A course in real estate is, therefore, at best a means to an end but certainly not an end in itself. In order to equip students with the basic understanding of the real estate market is as valid as instructing them on stock market dynamics for the familiarity of either field can open up carious career possibilities and attract youth to it. Also, the future real estate professionals are responsible to bring about some badlyrequired regulatory frameworks and catalyse a higher degree of transparency in the sector. And this is being taken as a positive step in the right direction. But should one choose to attend such a course, one is required to check its accreditation and verify if the courses are officially recognised or not. However, we all know well that no learning ever goes waste. Even basic real estate courses can kindle the fire among youth to gain experience and proficiency in this dynamic sector. If you are passionate about

making money, have an inclination to work round-the-clock and the ability to guide and supervise a team of builders, consultants, labourers and site managers, infrastructure, then real estate is the right career for you. To make a career in infrastructure and real estate industry, one needs all the skills to float an independent business. One needs to have contacts as well as connections and must build strong relationships to get business to his companyâ&#x20AC;&#x2122;s fold. Purchasing houses, plots, land, flats, houses and villas and then reselling them requires strong selling skills as well. Owing to the global economic meltdown, Indian real estate sector witnessed an all-time low during 2009 and as a result, several real estate consultants went jobless but then over the next three years, the situation has become stable to a large extent. Conventionally, a student after completing class XII can pursue distance education if he plans to pursue a career in real estate sector. If he wants to

work on the technical side and then aims to get a job in the sector, he must have a degree in civil engineering or construction engineering from any engineering college in India. Besides a technical job, he could complete an MBA in international relations or sales and marketing or have a degree in business communication to find a job with a construction company. The likely roles offered could be of a sales manager, a sales executive, a construction executive and so onâ&#x20AC;Ś However, you would require updated knowledge of the latest news on the market prices per square feet of land/ plots/ flats in different areas; stocks and shares status of various real estate companies; technical aspects of building and construction; various marketing, selling and pricing strategies to lure customers and a large network of buyers or shareholders. As a builder, the job involves purchasing raw materials and hiring labourers and architects. It then entails purchasing old properties and mortgaged

Credai Times

When you attend interviews for a sales or an engineering position in a real estate company, keep your list of contacts and friends ready as they can help you get business

or disputed lands and plots or houses and then converting them into sellable properties legally first. The next step is selling wherein you require strong coordination skills. Howsoever difficult the job may seem in the beginning, it provides a great opportunity to reap financial benefits. In India, there are several websites such as Indiaproperty. com, 99acres.com and Indiahousing. com that allow people to buy and sell properties across the country. These websites serve as mediators between sellers and buyers and make the job easy. Advertisements in newspapers are also a source of developing business.

When you attend interviews for a sales or an engineering position in a real estate company, keep your list of contacts and friends ready as they can help you get business; update knowledge on latest technologies and construction groups as it is necessary to ensure the employer that you are aware of the present prevalent prices and technologies and converse in English as well as dress up decently for presentation is important for all sales and engineering professionals.

Career options available in real estate sector

Residential real estate broker - A broker dealing in residential properties may represent either the buyer or the seller. Commercial real estate broker - Such a broker sells hotels, office space and similar commercial real estate

Credai Times

properties. He/ she may concentrate solely on retail office space, mall space, industrial space or hospitality space. He/she is involved in extensive market analysis, since commercial real estate is a preferred investment sector. Real estate appraiser - Such people determine the fair market value of a home for sale. They assess the value of properties on behalf of an appraisal firm, a bank or even major private investors. They are involved in refinancing, too. Property manager - Such a person usually is part of a professional property management firm and looks after the investment of the property owners. He handles customers and manages lease and rent deals. Good negotiation and people skills are de rigueur in this line. Facilities manager - Facilities management as a concept has just begun emerging as the best possible

route of maximise profitability and reduce overhears in large real estate projects such as residential townships, office buildings and malls. There is still a severe dearth of adequately trained facilities management personnel. Professional property and asset management companies train their operatives on the ground. Real estate investment consultant - Such a person has extensive inside knowledge of the real estate market and advises property investors on the best investment options. His main focus is to locate properties that will appreciate in value. Project development experts Such people are at the very nexus of the property market, and help create saleable properties. They advise developers on all aspects of the project, from the blueprint stage of final deployment.

trends

Affordable

ousing

is the need of the hour

oreign investment comprises of investment in capital and investment through borrowings. Investment in capital is channelled through Foreign Direct Investment etc. Investment through borrowings is covered by way of External Commercial Borrowings (ECBs) which are governed by Foreign Exchange Management (borrowing or lending in foreign exchange) Regulations, 2000. According to newspaper reports, Indian enterprises, during the course of last few years, have accessed significant amounts of foreign debt. In 2011-12, Indian companies raised a borrowing of about US$ 36 billion. Further, borrowings in September 2012, were recorded to be US$ 2.78 billion. According to the Reserve Bank of India (RBI) data, most of the borrowings were for import of capital goods, modernisation, new projects and rupee expenditure for import of capital goods.

Keeping in mind the appetite of developers, HFCs, NHB, the RBI and the Central Government should set a clear policy road map to enable stakeholders to avail the new ECB window for low cost housing projects, say Sunil Tyagi and Jayshree Navin Chandra

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EXTERNAL COMMERCIAL BORROWINGS (ECB)

ECBs refer to commercial loans in the form of bank loans, buyers’ credit, suppliers’ credit, securitised instruments (eg floating rate notes and fixed rate bonds, non-convertible, optionally convertible or partially convertible preference shares) availed from nonresident lenders with a minimum average maturity of three years. ECB can also be in the form of credit from official export credit agencies and commercial borrowings from multilateral financial institutions like IFC and ADB. ECBs and trade credits availed by residents in India are governed by clause (d) of sub-section (3) of Section 6 of Foreign Exchange Management Act, 1999, read with Foreign Exchange Management (borrowing or lending in foreign exchange) Regulations, 2000, dated May 3, 2000, as amended from time to time, and Master Circular on ECB (Current Master Circular on External Commercial Borrowings and Trade Credits was issued on July 2, 2012). The Master Circular on ECB provides for the borrowers who are eligible to raise ECB and also the recognised lenders. Such eligible borrowers can raise ECB under the following two routes: • Automatic Route: The Master Circular specifies the eligible borrowers, recognised lenders and the maximum amount that can be raised by respective eligible borrowers under this route, without the approval of the Government. • Approval Route: Under the Approval Route, prior permission of the Government is required for raising ECB of the amount exceeding the permissible amount under the Automatic Route, or any such amount specifically permitted to be raised by the eligible borrowers under the Approval Route. The ECBs raised under either of the two routes can be utilised only for the permissible end-uses under the respective routes as provided under Master Circular.

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ECB can be in the form of credit from official export credit agencies and commercial borrowings from multilateral financial institutions

ECB FOR LOW COST AFFORDABLE HOUSING PROJECTS

The RBI recently allowed developers/ builders with good track record in terms of quality and delivery and proven financial track record to avail ECB to develop low-cost houses. The NHB and those HFCs registered with NHB have also been allowed to avail ECB to finance the prospective owners of these housing units. Poverty, unemployment, paucity of land and demand – supply constraints

have rendered housing unaffordable for Lower and Middle Income Groups of Indian population. Keeping in view of the above factors and the announcement by the Finance Minister in the Union Budget 2012-13, the Government of India, under the process of reviewing and liberalising the policy related to ECB and to meet the objective of providing housing for low income groups, allowed ECB for low cost affordable housing projects as a permissible end use under the Approval Route vide AP (DIR Series) Circular No. 61 dated December 17, 2012 (Circular) issued

Credai Times

Countries define affordable housing differently to present the economic potential of an individual buying a house

Credai Times

by the Reserve Bank of India. “Affordability” as a concept is very generic and holds different meanings for different people and basically derives its defining criteria from the economy of a nation. Countries define affordable housing differently to present the economic potential of an individual buying a house. The circular issued by RBI defines the term “low cost affordable housing project” for the purpose of ECB as a project in which, at least, 60 per cent of the permissible Floor Space Index (FSI) would be for units having maximum carpet area up to 60 sq m. Further, the National Urban Housing and Habitat Policy (NUHHP), 2007 defines “affordable housing” as: “Houses ranging from about 300 sq ft (super built up area) for Economically Weaker Sections (EWS), 500 sq ft for Low Income Group (LIG) and 600 sq ft to 1,200 sq ft for Middle Income Group (MIG) at costs that permit repayment of home loans in monthly instalments not exceeding 30 per cent to 40 per cent of the monthly income of the buyer.

In terms of carpet area, an EWS house would be taken as having a minimum 25 sq m of carpet area, a LIG house would be limited to a maximum of 48 sq m of carpet area, and a MIG house would be limited to a maximum of 80 sq m of carpet area.” RBI has allowed raising of ECB in this category under approval route for the purpose of the following projects: • Low cost affordable housing projects (as defined there under); • Slum rehabilitation projects, whose eligibility is to be based on the parameters set by Central Sanctioning and Monitoring Committee of the Affordable Housing in Partnership (AHP) Scheme constituted under the Chairmanship of Secretary, Housing and Urban Poverty Alleviation (HUPA). The eligible borrowers include: Developers/ Builders: The developers/ builders should have proven track record based on the following criteria: • They should be a company registered under the Indian Companies Act, 1956; • They should have a minimum of five

years’ experience in undertaking residential projects and should have a good track record in quality and delivery; • They should not have defaulted in any of their financial commitments to banks/ financial institutions (FIs) or any other agencies; • The project should not be a matter of litigation; • The project should conform to the Master Plan/ Development Plan of the area, and the layout should conform to the land use by the town and planning department; • Necessary clearances from various bodies including Revenue Department should be available on records. Housing Finance Companies (HFCs): HFCs can avail of ECB for financing prospective owners of low cost affordable housing units, subject to the fulfilment of the following conditions: • HFC should be registered with the National Housing Bank (NHB) and should operate as per the guidelines issued by NHB; • The minimum paid-up capital (as per latest audited balance sheet) should not be less than `50 crore; • The minimum Net Owned Fund (NOF), for past three financial years should not be less than `300 crore; • ECB raised should be within the HFC’s overall borrowing limit of 16 times their NOF; • The net non-performing assets should not exceed 2.5 per cent of the net advances; • The maximum loan amount sanctioned to the individual buyer is capped at `25 lakh provided the cost of the individual housing unit does not exceed `30 lakh; and, • The ECB should be swapped into Rupees for the entire maturity on fully hedged basis. National Housing Bank(NHB): NHB can raise ECB for financing low cost housing projects of individual borrowers, and for on-lending to those developers/ builders who fulfil the requisite conditions as stated above, subject to the

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The ECB proceeds raised can be utilised only for low cost affordable housing projects and cannot be utilised for acquisition of land

interest rate spread set by RBI. The ECB proceeds raised can be utilised only for low cost affordable housing projects and cannot be utilised for acquisition of land. Further, developers/ builders/ HFCs/ NHB are not allowed to raise Foreign Convertible Currency Bonds (FCCBs) under this scheme. The aggregate limit of US$ 1billion for raising ECB under the low cost affordable housing scheme had been set for the financial year 2012-13, subject to annual review. Builders/ developers meeting the eligibility criteria have to apply to NHB in the prescribed format. NHB has been

empowered to act as a nodal agency for deciding a project’s eligibility as low cost affordable housing project, before forwarding the application to RBI for consideration under the approval route. Once NHB decides to forward an application for consideration of RBI, the prospective borrower ie the builder/ developer would be advised by the NHB to approach RBI for availing ECB through his authorised dealer in the prescribed format. Following the RBI circular, the nodal agency NHB has notified guidelines setting out the procedure for submitting the application for ECB with NHB. Under

these guidelines, the NHB also has set out the monitoring mechanism both off-site as well as on-site for projects that have availed ECB. The circular also clarifies that all other ECB parameters such as recognised lender, minimum maturity period, all-incost ceilings, reporting requirements etc. shall be governed as per the conditions mentioned under master circular on ECB issued by RBI. Before drawing the down ECB, the borrower has to obtain a loan registration Number (LRN) by filing Form 83 through a designated AD Bank. Further, the applicants are required to follow reporting requirements irrespective of the investment route. The borrowers are required to submit ECB-2 Return certified by the designated AD Bank on monthly basis so

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as to reach Reserve Bank within seven working days from the close of month to which it relates. Further, the borrowers are also required to comply with the ECB guidelines relating to utilisation of ECB proceeds, amount and maturity, all-in-cost ceiling, guarantee etc as given specifically for approval route.

Sunil Tyagi is a Senior Partner and Jayshree Navin Chandra is a Managing Associate at ZEUS Law Associates (‘‘ZEUS’’). ZEUS is a full-service corporate commercial law firm and the Preferred Legal Partner for CREDAI. One of its areas of specialization is transactional and litigation work in real estate and infrastructure. The authors can be contacted on zeus@zeus.firm.in.

CONCLUSION

Considering the huge demand for building such projects and for loans for low-cost homes and also considerding the appetite of developers, HFCs and NHB the RBI and the Central Government should reivew and raise the financial limit for this financial year and set a clear policy road map enabling stakeholders to avail this new ECB window made available for low cost housing projects.

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environment

...but not a drop to use

Real estate developers claim that imposing a blanket ban on extraction of groundwater by the Central and state governments is no solution to stop water depletion in the country

e all are well aware that for almost all the water needs, groundwater is by far the most important resource, not only in India but across the globe. And that one of the major challenges to Indiaâ&#x20AC;&#x2122;s social and economic development has been scarcity of water. According to a UNEP study, over two billion people depend on aquifers for their drinking water and 40 per cent of the worldâ&#x20AC;&#x2122;s food is produced by irrigated agriculture that relies largely on groundwater. In fact, groundwater constitutes about 95 per cent of freshwater on our planet (discounting the ones locked in polar ice caps), making it fundamental to human life and economic development. Not

many of us know that India is the largest groundwater user in the world, with an estimated usage of around 230 km3 per year, more than a quarter of the global total. Over the years, direct human interventions have led to reduction in groundwater recharge in India. These include deforestation, destruction of local water systems including traditional water systems like ponds, tanks, lakes, wetlands and so on, stoppage of river flows by dams and even run of the river projects. Deforestation also leads to change in river flow regime in the affected area that also affects the recharge in the given

area. Then there are larger and indirect human interventions that have affected groundwater recharge systems including urbanisation and concretisation of land, leading to global warming as also evapotranspiration. For years, groundwater has played a vital role in the Indian real estate sector and if the same is stopped, it will come to a halt. “We cannot afford to stop construction work in the absence of groundwater. If the real estate developers purchase water from elsewhere, it will push up the prices of projects and the buyers will have to bear the increase,” says CREDAI vice president Geetamber

The order definitely has come as a shock and it will affect the construction work

Anand. Apparently, it is feared that the procurement of water from other sources will have a direct bearing on the cost of construction that shall increase by around 10-15 per cent which will pass on to prospective buyers. “During the stage of structure building, water is a massive component and a lot of the underground water is drawn for this. If we bring it from other areas, it automatically increases the input cost of the project. This eventually will pass on to the consumers. However, developers have to rework on the action

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plan and try to observe as much as they can,” says Manoj Goyal, CMD, KDP Buildwell Pvt Ltd. Developers claim that if the Central or state governments impose a blanket ban on extraction of groundwater, it surely is not a solution to stop water depletion. “There should have been proper assessment of the levels of depletion of groundwater and subsequently devised a solution for its conservation and recharge while undertaking construction work,” adds Anand.

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For example, developers and builders in Noida and Greater Noida came in for a setback when the National Green Tribunal gave prohibition orders of drawing underground water for construction or other purposes in January this year. It was a major blow for the builders and developers operating in these areas. According to the Tribunal, the step to immediately stop extraction of underground water in any quantity by builders was taken in the wake of alarming depletion in the water table of the area. The Tribunal also noted that although the guidelines have been duly notified by the Central Ground Water Authority (CGWA) to ensure no undue extraction of water and over-compliance with several conditions, they have been

violated with minus any penalty. “The order definitely has come as a shock and will affect the construction work in the region which has been going on at a rapid pace. We are in constant touch with the authorities on this and hope to solve the issue soon. Most city planners are planning the requirement of water, electricity, transport and other infrastructure with the vision document ie the Master Plan. The authorities have huge funds lying with them on account of External Development Charges (EDC) which should definitely be used for creating such infrastructure. We all know that urbanisation is important for the progress of the nation and should be stopped at no cost,” says Sanjeev Srivastva, managing director, Assotech

Developers disagree with the view of the tribunal regarding the depleting water table in the said areas

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Limited. However, the order has left a question on the minds of the developers regarding the supply of water for construction activities. CREDAI NCR president and Eldeco Properties managing director Pankaj Bajaj shares that there is no clarity on how water for construction purposes is to be organised. “The concerned authorities are supposed to provide water for the housing sector but many of these are still undeveloped and water supply will only be operational a few years later. The STPs in the area too do not have enough capacity to supply all the construction projects. This will surely affect the developers’ ability to adhere to the construction schedules,” he shares. Groundwater depletion is a phenomenon that has been observed in

Punjab, Haryana, Gujarat, Rajasthan, Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu over the last three decades. The main cause for depletion, undoubtedly, is the overexploitation of the available groundwater resources. A range of incentives offered under various developmental programmes have been the principle causes for overuse of precious groundwater resources leading to groundwater pumping far more than the rate of recharge. Developers feel it is time that policy-makers stopped treating the real estate development industry as the most dispensable entity in any situation where a balanced view is required. “Yes, water is a precious resource and should never be wasted. Does that mean that housing is not required for us?” questions Bajaj.

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Real talk

Are we heading towards an

urban

mess

As more urban conglomerations form and grow without adequate infrastructure, the problems will only get worse, says G Venkata Prasad

nder the subject, Challenge of Urbanisation, in the draft copy of Approach to 12th Five Year Plan, it is said: An interesting aspect of the urbanisation trend revealed by the Census is that the number of towns in India increased from 5,161 in 2001 to as many as 7,935 in 2011. It points out that almost all of this increase reflects the growth of ‘Census’ towns (which increased by 3,894) rather than ‘statutory’ towns (which increased by only 242). ‘Statutory’ towns are ones with municipalities or corporations whereas ‘Census’ towns are agglomerations that grow in rural and peri-urban areas, with densification of populations, that do not have an urban governance structure or requisite urban infrastructure of sanitation, roads etc. As more Indians will inevitably live within urbanised conglomerations, with densification of villages, sprouting of periurban centres around large towns, and also migration of people into towns, the quality of their lives and livelihoods will be affected by the infrastructure of India’s urban conglomerations. The infrastructure of India’s present towns is exytremely poor. Sewage, water, sanitation, roads and housing are woefully inadequate for the inhabitants and the worst affected are the poor. As more urban conglomerations form and grow without adequate infrastructure, the problems will only become worse. Therefore, India’s urban agenda must get much more attention. It is unfortunate that on their part the Planning Commission themselves gave a very grim status about the way by which the mammoth scale of urbanisation is being handled in the country by the Government. Required governance is not in place for major portion of urban India due to which most cities/towns lack many basic urban facilities/ infrastructure. The way the entire urbanisation issue is being handled, the situation is expected to be get worse in future. The following figures as mentioned in

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India’s urban agenda needs to be addressed soon as the present condition is quite grim

McKinsey report on Urbanisation of Indian Cities published in April 2010 indicates the same. We have been witnessing that the Government machinery is not in a position to address such issues. In these circumstances, with the result the gap in having necessary urban structure is going up year after year and affecting the quality of life of Indian urban population.

Now the question is: • Can we remain as mute spectator by blaming every act of the Government ? • What is the way out to address the above issues? • Are there any solutions available? • What is the kind of organisation structure required at Government level? • What is the likely fund requirement

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The draft 12th Five Year Plan envisaged capital expenditure of `40 lakh crore to build required urban infrastructure in next 20 years

to provide required infrastructure and how to meet it? The draft 12th Five Year plan envisaged capital expenditure of `40 lakh crore to build required urban infrastructure in next 20 years and further `20 lakh crore for operation and maintenance. The McKinsey report assessed this requirement to be in the order of $1.2 trillion against Capex and $1 trillion against operational expenditure. It is to be noted that we are, at present, at a level of $17 per capita per annum with regard to the funds being infused on infrastructure Capex against requirement of $134. Imagine the fate of all our cities if same situation continues in future.

With the Government machinery getting entangled in a complex web of problems, they are channelising their efforts more in attending to the same on crisis management basis and thus they are not able to come out with required vision/ plan/ resources in handling these issues in an organised manner. By allowing this to continue, the urbanisation process will get a severe beating.

Projections of quality of urban services based on present trends Parameter

The role of CREDAI

CREDAI can take the initiative of forming core committee for each of basis services comprising representatives from • CREDAI • Educational institutions • Industry with domain knowledge in

Water supply Sewage Solid waste Private transport Rail based mass Affordable (Bn litres/day) (Bn litres/day) (Mn tons/annum) (Thousand lane km) transit (Route km) Housing (Mn units) 2007

2030

2007

2030 2007

2030

2007

2030

2007

2030

2007

2030

Supply

295

430

540

990

1,990

Basic demand

189

151

377

640

980

3,000

8,400

Gap

109

210

440

2,010

6,410

particular field • Financial institutions • NGOs • Media To assess the extent of capacity augmentation required for each of following services, fund augmentation plans, implementation and monitoring plans over period of time: • Urban services • Water • Sewage disposal • Solid waste disposal • Storm water drains • Urban roads • Mass transport • Slum housing • Power In a stage-wise manner, it can start engaging government machinery to rope in their support for implementing the said plans. Continuous basis media coverage is to be provided to make the common citizen to understand the gravity of the situation and for enabling them to become responsible citizens and fulfillment of their roles and responsibilities. (The author is COO, Tamil Nadu Projects, L&T Urban Infrastructure)

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Home prices in Lutyens’ Delhi rise eight-fold in 10 years

National Buzz

Mumbai 16th costliest global city for luxury homes

Real estate prices in the country’s financial capital, Mumbai, have become unaffordable for many as they seem to be ever-increasing. In fact, the metro is one among the few international cities that witnessed hike in property prices in 2012 and has been ranked 16th on the list of world’s most expensive cities to buy a luxury property where the property comes with a price tag of about `57,000 per sq ft, according to Knight Frank’s report. The report also stated that Mumbai is one among the few international cities that witnessed hike in property prices in 2012. “We have seen a price increase of 0.5 per cent in prime residential properties in Mumbai in 2012 at `57,800 per sq ft,” said Samantak Das, Knight Frank India Research and Advisory Services director. The southern part of the city is the main region for prime properties and some of the locations include Colaba, Cuffe Parade and Malabar Hills, according to the ‘Wealth Report 2013’. However, the Delhi-NCR regions may see the price rise less than 5 per cent in the luxury home category in 2013, added Das.

Hyderabad second most affordable office market in the world Hyderabad, Chennai and Pune are on the list of world’s most affordable office markets, according to a report published by property consultant firm, DTZ. Hyderabad stood at second position on the list. “Tier II cities in China and India continue to dominate the list of top 10 most affordable markets globally,” DTZ said in its report that mainly highlighted the occupancy costs for prime office space across 126 markets globally. “The most affordable office market remains Surabaya ($1,610 per workstation per annum), followed by Hyderabad and Chongqing,” the report said. Indian cities like Pune and Chennai stood at fifth and sixth positions respectively. But London’s West End has come up as the least affordable office market worldwide, according to DTZ.

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Over the last decade, property prices in Lutyens’ Bungalow Zone in New Delhi have increased eight-fold. The reason: Homes are always in short supply in this posh area of . While the value of the private portion of the Lutyens Bungalow Zone - around 254.5 acres has gone up from around `6,100 crore to `49,000 crore in the past 10 years, the value of the 995 acres occupied by government bungalows has grown from `24,000 crore to `1,92,000 crore, albeit notionally, based on current market rates derived from recent transactions in the area. As of now, there are over a 1,000 bungalows of which only 65 are privatelyowned and the rest by the Government, and are occupied by the country’s top politicians, bureaucrats, judges and officers of the armed forces. Witnessing the rise in property prices, a number of families living in the area for over four decades are ready to sell these British colonial bungalows. Some of them are asking for astronomical sums of money. In fact, the owner of an 8,000-sq yards plot on Tughlaq Road has demanded `700 crore while a similarsized plot on Prithvi Raj Road has a price of over `600 crore while another one acre property on the same road could be bought for `480 crore.

National Buzz

First phase of SmartCity project to be completed in two years

The first phase of the much-delayed `2,000 crore SmartCity Project will be completed in two years, Kerala chief minister Oommen Chandy has claimed. He said all efforts would be made to get environmental clearance for the same within 45 days. The project, a joint venture between Dubai’s Telecom Investments and Kerala Government, is expected to create 90,000 job opportunities in Kerala and aims to attract the best of knowledge based industries across the globe to set up operations. Admitting the project had been delayed by over six years, Chandy

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said basic infrastructure facilities in the city would be improved and the final master plan will be ready within a month-and-a-half. SmartCity managing director Baju George said that in a bid to attract more IT companies to the project, marketing would be taken up in a big way. The Centre had recently accepted the state’s plea to make the entire project under single Special Economic Zone (SEZ). SmartCity Kochi is one of the first two projects of Smartcity’s vision to build a large network of knowledge based industry townships across the world. The other is SmartCity Malta.

UAE developer to launch $1 billion property project in India

Dubai-based private developer DAMAC Properties has shared that it is launching phase II of a $1 billion project of luxury hotel and serviced residences to Indian investors, following a sell-out event in Dubai. DAMAC Towers by Paramount is being developed on platinum real estate in Dubai overlooking the world’s tallest tower Burj Khalifa. It comprises a 540 key Paramount Hotel & Residences and more than 1,000 units of DAMAC Maison-Paramount (Hollywood movie production firm) co-branded serviced hotel residences. These will be developed by DAMAC Properties in partnership with Paramount Hotel & Resorts (PHR-FZ-LLC). The one, two and three bedroom serviced hotel residences will be managed by DAMAC Maison, the hospitality division of DAMAC Properties. Serviced Hotel residences will feature fully-fitted kitchens and services that also include valet parking, concierge, housekeeping, in-room beauty treatments and 24-hour kids club. In addition, owners can elect to add their residence in the ‘rental pool’ while they are away, allowing for rental returns to be generated. DAMAC Properties has completed 37 buildings to date with 7,817 units and spanning 13,945,299 sq ft.

study

Contents Unleashing the real power of Eastern NCR Regional Profile Impact Delhi Physical Infrastructure Initiatives

Sub-regional assessment

86 90 94

Economic performance

Noida

Industrial sectors at a glance

Greater-Noida

Social Infrastructure Status

Ghaziabad

Urbanisation levels Present real estate trends

The study has been authored by Manish Kumar, Local Director (Strategic Consulting Group) and Priyanka Gera, Manager (Strategic Consulting Group) with active support of Rohan Anand, Analyst (Strategic Consulting Group), Jones Lang LaSalle Property Consultants (I) Pvt Ltd

Regional supply statistics

50 52 58 64 66 72 76 80 82 84

On the back of improved connectivity and linkages within the region, Eastern NCR has observed manifold escalation in residential property prices and the trend is likely to continue

Direct Employment

335,000 persons

Indirect Employment

135,000 persons

Total Real Estate Business

»» Real estate sector is No. 1 contributor of revenue to the Government for the last few years.

»» Total contribution of real estate sector in employment generation far exceeds any other industry in the region. »» Not many know that real estate drives the economic growth of Eastern NCR and not IT, exports, industries or service sectors.

Total Residential Realty Business `190,000 crore Entailing 400,000 units

Regional Profile

»» The total number of home loan disbursements in the region is one of highest in the country.

Aashiana, Ajnara, Amrapali, Assotech, Ats, Dlf, Gaursons, Gulshan, Mahagun, Omaxe, Panchsheel, Parsvnath, Prateek, Shipra, Supertech and Waves

»» Noida could manage to fund the cost of Metro only due to the financial support of the real estate sector, indicating the fact that the revenue generated from the sector can contribute even for funding high-cost infrastructure facilities.

n the strength of a futuristic and robust Master Plan and systematic land use planning, Eastern NCR has emerged as a shining example of good infrastructure, connectivity and linkage within the region. Today, Eastern NCR boasts of quality residential and international standard office spaces, education and healthcare facilities etc. And all put together have become the REAL power for this region. The changing profile of east Delhi, various infrastructure initiatives, vast scale private sector intervention in real estate sector, increasing urbanisation and corporatisation of NCR have led to a huge progress of Delhi suburbs with Noida, Greater Noida and Ghaziabad being no exceptions. Suburban locations have witnessed remarkable development in terms of both private builder activity and Government initiatives in physical and social infrastructures, support amenities and housing space. Eastern NCR towns host a wide range of options including

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residential supply

Major Developers

»» The revenues generated by Noida and Greater Noida authorities from the real estate sector have been utilised for the development of other regions of Uttar Pradesh.

integrated residential townships that offer fully developed plots, independent bungalows, high-rise apartments, pent houses and independent floors. Additionally, the group housing projects in these cities not only offer economical housing but offer several modern amenities like health clubs, sports facilities and swimming pools. A number of well-known builders are involved in developing the city with their rich industry experience and knowledge. They ensure maintaining the infrastructural and architectural designs in tandem with the latest prevailing trends. Most popular projects in the region include Jaypee Wish Town, Crossings Republik, Lotus Boulevard, VVIP Addresses, Ajnara Integrity, Supertech Supernova, Wave City and Jaypee Sports City. Eminent developers like Jaypee, 3C Company, Unitech, Amrapali, Logix, Supertech, Gaur, Mahagun and Ajnara have observed good absorption and price escalation over the last five years.

`300,000 crore

Real Estate Sector in Eastern NCR Suburbs

real Unleashing the

Direct Tax

`24,000 crore

(Stamp duty, service tax, work tax, labour cost, indirect building materials tax)

400,000 residential units on offer

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Real Estate Sector in Eastern NCR Suburbs

Advantages Geographically well-connected With three Highways/ Expressways and NCRs first Toll Road

Key Growth Drivers

Regional Profile T

he entire region has been planned carefully and has, of late, been identified as one of the biggest expert townships having a perfect IT/ITES position and is one of the best residential destinations in India. The region observes large number of construction projects which offer quality housing and office spaces that are equipped with modern amenities, making real estate in the region all the more desirable. Unaffordable prices in Delhi had dragged attention of end users to these suburban locations. Noida, typically, offers premium housing complexes to suit the needs of upper income group whereas Greater Noida including Greater Noida West and Ghaziabad target middle income population. Thus, residential properties in Greater Noida and Ghaziabad have come across as the next best option, given their location advantage, connectivity, environs and the enormous potential for development. Over the last few decades, Noida and Greater Noida have gained reputation and emerged as a major hub for IT and other eminent MNCs who are getting drawn to the cities due to their incredible features and modern facilities. Housing a variety of IT companies, big manufacturers and other business groups in the region, residential property in Eastern NCR is also affected

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by a massive demand. The region flaunts a cumulative supply of approximately 400,000 residential units currently in various stages viz completed, under construction and under planning as well, on the back of high investor driver and end-user demand. On the back of improved connectivity and linkages within the region, Eastern NCR has observed manifold escalation in residential property prices and the trend is likely to continue. In terms of linkages, majority infrastructure initiatives in the form of roads and transport networks have commenced operations in the eastern suburbs of Delhi which include DND Flyover connecting South Delhi with Noida, expansion of NH-24 connecting central Delhi via Nizamuddin Bridge with Ghaziabad, Noida-Greater Noida Expressway connecting Noida and Greater Noida and Yamuna Expressway which commenced operations since 3Q 2012, provides direct access to western Uttar Pradesh from Greater Noida along with enhanced connectivity with Kundli-Manesar-Palwal Expressway. These initiatives have already had a definite impact on the general direction of growth of the region, enabling enlargement of the real estate activity geographically and improving the overall connectivity between various areas in and around Delhi.

High Disposable Income

Real Estate Sector in Eastern NCR Suburbs

Established Industrial Hub entailing Large Educated Workforce Conducive Investment Climate

High Quality Infrastructure

Eastern NCR towns host a wide range of options including integrated residential townships that offer fully developed plots, independent bungalows, high-rise apartments and pent houses...

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Panipat

Sonepat Baghpat

Rohtak

Delhi

Jhajjar

Gurgaon

Meerut

Ghaziabad

Gautam Buddha Nagar faridabad

Bulandshahar

real estate sector in eastern ncr suburbs

Simply exceptional

Rewari

Mewat

he eastern suburbs of Delhi comprising Ghaziabad, Noida and Greater Noida are prospering areas that compete with Gurgaon and Manesar regions. The suburb has been recognised as one of the most planned ones in India, offering a high standard of living and reasonably good per capita income levels when compared with other towns. A favourable policy environment and host of infrastructure projects further act as a catalyst to drive huge commercial activity, turning the region into a preferred destination. Medium population density, quality infrastructure and good connectivity are the prime reasons for the rise in real estate activity in this region. Moreover, real estate developments in the area are more cost-effective than other developed suburbs including Gurgaon thus enhancing the cost worthiness of the eastern NCR.

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Alwar

feature focus Area

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he reason why Delhi has been growing at a rapid pace is due to the ever-increasing migration to the Capital. The unprecedented growth of population, especially during postIndependence years and the consequent haphazard development have been putting severe pressure on infrastructure of the National Capital Territory (NCT). Therefore, it was suggested, through various planning exercises beginning 1956, that serious

considerations should be given for a planned decentralisation to the outer areas, even outside Delhi region. This triggered the concept of National Capital Region with Delhi as the main node and covering approximately 33,578 sq km as the runaway growth that continues unrestricted. Due to paucity of land for future development in Delhi, agricultural lands on the fringes of the city were the first to be

33,578

sq km, the runaway growth of Delhi

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Delhi-NCR has emerged next only to Bengaluru as the IT hub of India which has further boosted the demand for NCR’s residential real estate market

gradually converted by urbanisation. This has been accompanied by incentives to private developers which have further assisted in the growth of Gurgaon, Noida, Greater Noida, Ghaziabad and Faridabad as viable suburbs where inexpensive real estate and quality development have ensured competition to Delhi’s real estate market. In fact, the last two decades have seen tremendous growth in these cities and they have managed to attract sizeable investments and relocation of corporates. Moreover, development

of fringe areas has been a resultant of infrastructure and transport connectivity development. These areas have been derivative of Delhi’s property market itself and have shown tremendous real estate activity in the past few years. In fact, Delhi-NCR has emerged next only to Bengaluru as the IT hub of India which has further boosted demand for NCR’s residential real estate market. NCR takes bearing from Delhi NCT in terms of overall

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Real Estate Sector in Eastern NCR Suburbs

Impact Delhi

economic and infrastructure development as well as growth. Infrastructure improvement in the NCR, along with the presence of IT companies, has proven to be beneficial for the overall real estate market of the region. It is now home to major international and national companies operating in various sectors like IT and ITES, business process outsourcing companies, or other manufacturing and service industries which have boosted the demand for NCRâ&#x20AC;&#x2122;s residential real estate market. All major builders such as Tata Housing, Mahindra, Godrej, DLF Ltd, Unitech, Vipul, Vatika, Parsvnath, Omaxe, BPTP and Raheja among others are developing projects in this region. Upcoming builders such as 3C Company, Logix, Amrapali, Ajnara, Paras, Gulshan Homes, Today Homes, TDI and M3M have also entered the NCR residential real estate market. Meanwhile, Gurgaon has come up as one of the most prominent and preferred IT locations attracting big corporates and MNCs. Characterised by a great resource pool and coupled with high annual per capita household income levels earnings make the city an ideal location for retail and residential development. Its transition from industrialisation to corporatisation has led to an upsurge in demand for residential and commercial office spaces in the city resulting in an exponential growth in capital and rental values in a short span of time. Gurgaon had been the main focus of investor segment in the NCR due to the plethora of offerings in real estate sector. However, the focus has moved beyond to the eastern suburbs owing to an overheated market and property prices in Gurgaon which have increased manifold since 2004. This, coupled with highly deficient infrastructure in Gurgaon, is proving to be a major drawback in terms of end user and investment market. However, having emerged as industrial hubs of the NCR,

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Noida, Greater Noida and Ghaziabad, the bustling suburbs of Delhi towards eastern side have also emerged as hot IT spots, triggering residential, retail and commercial real estate boom and offering great investment opportunities. The lack of newer and quality residential, retail and office developments in Delhi has triggered the realty boom, especially in the eastern suburbs of Delhi along with Gurgaon. Noida has emerged as a

perennially prospering suburb which is now actively competing with Gurgaon. Along the lines of Noida, Greater Noida is also planned to be developed as a hub for residential, IT and industrial development. The twin city development constinues to provide salient features including quality infrastructure and costeffectiveness. Ghaziabad has also grown from an industrial city to a major residential town of NCR specifically for middle income

population owing to cost-effectiveness and good connectivity. The three combined regions, comprising the eastern suburbs, are witnessing continued investments across all spheres of real estate. The extents of development in Eastern NCR have now expanded till Raj Nagar Extension, Greater Noida and Yamuna Expressway which once were limited to Noida and limited areas of Ghaziabad.

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Real Estate Sector in Eastern NCR Suburbs

NCR is now home to major national and international companies operating in various sectors like IT and ITES, business process outsourcing organisations

initiatives

4 75+

major highways and expressways

Noida-Greater Noida Expressway, NH 58, NH 24 and Yamuna Expressway

major sector roads Noida Toll Road

Real Estate Sector in Eastern NCR Suburbs

Physical infrastructure

oida and Greater Noida already enjoy operational expressways such as DND Flyway, Noida-Greater Noida Expressway and Yamuna Expressway, all of which have already reduced travel time to Delhi as well as within Noida and Greater Noida. It has also created newer locations for real estate development in these cities. It has been observed that the performance of residential sectors in Greater Noida has improved since the completion of both the expressway projects. Since the commencement of Yamuna Expressway, residential real estate has seen a high along this stretch with the prices of plots having almost doubled in a short duration. With large-scale development in Ghaziabad, the concerned authorities have approved widening of National Highway 24 (Hapur Road) and National Highway 58 (Meerut Road) to six lanes in order to improve the connectivity for daily commuters in Ghaziabad and its fringes. Coupled with the same, various other initiatives are being planned and implemented within Ghaziabad to improve road infrastructure in the city. According to Ghaziabad Master Plan 2021, there are proposals for eight flyovers, five grade separators and two underbridges at various important intersections in the city. Eastern NCR is a part of an enhanced Mass Rapid Transport System (MRTS) including Metro, commuter rail and buses to address the public transport requirement for the region. Delhi Metro already has its initial phase of operation in Noida and Ghaziabad regions and is planning to further improve connectivity within Noida, Ghaziabad, Greater Noida and Greater Noida West regions in subsequent phases. The larger area of the eastern suburbs of Delhi is planned under the MRTS ambit in short to medium-term which shall provide further boost to the existing public transport system and will specifically ease connectivity with Delhi, once it is totally complete. MRTS has already had a positive impact on growth of real estate market and sustained development of Noida and Ghaziabad where Metro commenced operations in 2010 and 2011 respectively. Since then, the region has observed tremendous escalation in residential property prices, which are likely to soar even more once construction of the entire Metro project is complete.

NCRs first toll road connectiong eastern NCR to posh colonies of South Delhi

existing Metro stations

Have already ensured better commuting to the Capital and nearby areas

25+

proposed Metro stations 64

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Real Estate Sector in Eastern NCR Suburbs

Economic

performance

oupled with enhanced connectivity and linkages to Delhi, the economy of eastern suburbs is another thrust for performance of residential real estate market in the region. These suburbs have a strong economic presence both in their respective state as well as in NCR. However, the economic profile of Ghaziabad and Noida-Greater Noida varies to a large extent. While Ghaziabad is a prominent industrial centre, Noida and Greater Noida have made tremendous progress in industrial as well as IT/ ITeS contribution as well. Ghaziabad and Gautam Buddha Nagar districts contributed a significant 7.65 per cent to the State Domestic Product of Uttar Pradesh during 2009-10 whereas both districts comprise mere 1.2 per cent of the total area of the state. In terms of economic indicators, both Ghaziabad and Gautam Buddha Nagar districts (Noida and Greater Noida regions) contribute significantly towards state revenues. For 2009-10, Gautam Buddha Nagar had gross district domestic

product of approximately `14,156 crore whereas Ghaziabad during the same period had a district domestic product of approximately `13,648 crore. Both the districts contributed a significant 7.65 per cent to the state domestic product of Uttar Pradesh during 2009-10 whereas both districts comprise a mere 1.2 per cent of the total area of Uttar Pradesh. The contribution is likely to be on a higher side in the current year owing to tremendous development witnessed by both the districts, especially in IT and construction sector since 2010. In terms of contribution by real estate sector to the state, Ghaziabad contributes approximately 4.59 per cent to the state domestic product while Noida contributes 1.41 per cent. Approximately 21.7 per cent of the district domestic product for Ghaziabad comes from real estate-related activities. The figure for Gautam Buddha Nagar was relatively lower at 6.5 per cent, owing to large industrial component in Gautam Buddha Nagar. However, over the past two-three years, a large quantum of real estate

According to an Assocham report, Noida and Greater Noida alone accounted for 87 per cent of total jobs generated in the top six cities of UP between January and December 2012 Real Estate Sector in Eastern NCR Suburbs

22%

is Gautam Buddh Nagar and Ghaziabadâ&#x20AC;&#x2122;s contribution to state domestic product in manufacturing

56,800

jobs in Noida and Greater Noida

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Real Estate Sector in Eastern NCR Suburbs

21.7%

of district domestic product for Ghaziabad comes from real estate sector

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domestic product in manufacturing which indicates tremendous thrust of industries in the region and exceptional industrial performance of both these districts. The total contribution of secondary and tertiary sectors in the GDP of Ghaziabad and Gautam Buddha Nagar stands at approximately 86 per cent and 95 per cent respectively as in 2009-10. Statistics indicate a larger prominence of secondary sector (comprising of manufacturing, construction and electricity, gas and water supply) in Gautam Buddha Nagar district whereas larger contribution of tertiary sector in Ghaziabad district.

4.59% is what Ghaziabad contributes to the state domestic product

6.5%

of district domestic product for Gautam Buddha Nagar comes from real estate sector

Over the past two-three years, a large quantum of real estate developments has been launched in Noida-Greater Noida such as Noida City Centre, Greater Noida (West) and Noida Expressway On the back of expansive manufacturing sector, coupled with robust industrial and tertiary base, Noida and Ghaziabad enjoy high Work Force Participation Rate (WFPR) and tremendous employment opportunities leading to sustained development and growth of both these cities. In addition to the above, growing IT industry has further opened doors to employment of rich talent pool from all over north India leading to higher migration from neighbouring states to Noida and Greater Noida and resultant higher employment rate of the twin city. According to a recent Assocham report, it has been indicated that the twin cities of Noida and Greater Noida alone accounted for 87 per cent of the total jobs generated in the top six cities of Uttar Pradesh between January and December 2012 and the trend is likely to continue in near future. With about 56,800 jobs, Noida and Greater Noida together remained the highest employment generating cities of the state. Moreover, Census 2001 highlights a WFPR of approximately 34.9 per cent in Noida and 27.6 per cent in Ghaziabad. The

proposed participation ratio as per NCR plan for the year 2021 for Noida and Ghaziabad are 35 per cent and 30 per cent respectively. The region comprises the most important industrial districts of Uttar Pradesh. One of the most important factors that has given rise to its position is its proximity to the National Capital. The other contributing factors are strategic location, well-knit road links and other infrastructural facilities. In order to attract investments and contribute to the development of economy of the overall region as well as the state, the government of Uttar Pradesh has undertaken several policy measures. These policies provide a roadmap and attempt to boost the industrial climate and remove various road blocks which hampered the overall industrial expansion of the state. These policy documents also encompass investment incentives and schemes for investors. This has led to the influx of industrialists from Delhi to establish their facilities in Noida, Greater Noida and Ghaziabad regions.

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Real Estate Sector in Eastern NCR Suburbs

developments has been launched in Noida-Greater Noida such as Noida City Centre, Greater Noida (West), Noida Expressway etc. Thus, the contribution figures for the region are likely to have risen exponentially in the present year and for future as well. Manufacturing is one of the prime contributors in GSDP of Uttar Pradesh and in itself comprises of a whopping 60 per cent of the district product for Gautam Buddha Nagar and 25 per cent for Ghaziabad. Viewing economic performance with respect to manufacturing alone, Gautam Buddha Nagar and Ghaziabad comprise of approximately 22 per cent of contribution to the state

I Key Initiatives »»26 notified SEZs

»» Region falls under the ambit of DMIC and Western Dedicated Freight Corridor »» Tronica City, an apparel park developed over 1,600 acres in Ghaziabad

»» Export Promotion Industrial Park across 200 acres proposed at Gautam Buddha Nagar

at a glance

n order to promote investments and boost industrialisation in the region, Uttar Pradesh government, along with private players, has developed many SEZs, industrial clusters, IT and other industrial parks in the region. Abundant resources, policy incentives, availability of workforce, large consumer markets and infrastructure both in Ghaziabad and Gautam Buddha Nagar districts, makes it an attractive investment destination. Some of the important sectors in the region include light engineering goods, sports goods, electronics, textiles, garments, IT & ITeS, rubber, plastics and petroleum, chemical and chemical products, electric machinery equipment and parts, transportation equipment, paper products and printing. It is also a part of the Delhi-Gurgaon-Noida-Ghaziabad auto clusters and as a result, a number of original equipment manufacturers and auto component suppliers have setup their bases at Noida and Ghaziabad. In August 2007, Uttar Pradesh government announced the UP Special Economic Zone (Amended) Policy-2007 in order to foster the industrial and economic development and creating

a conducive environment for development of SEZs in the state. So far, a total of 28 SEZs proposals in Ghaziabad, Noida and Greater Noida have been recommended and notified by the UP government to Government of India. Of the notified SEZs, 26 fall under the IT/ ITeS category and all of them are located in Noida or Greater Noida. Eight SEZs are functional in Uttar Pradesh of which seven are located in Noida and Greater Noida. The region also falls under the ambit of proposed DelhiMumbai Industrial Corridor (DMIC) which is a major industrial infrastructure initiative jointly taken up by governments of India and Japan stated as the Special Economic Partnership Initiative (SEPI). DMIC envisages activating local commerce, enhancing foreign investment and attaining sustainable development. With an overall length of 1,483 km and terminals at Dadri of Greater Noida and Jawaharlal Nehru port of Mumbai, quality infrastructure is expected to extend to 150 km on both sides. Among the total 20 nodes (13 investment regions and seven industrial zones) proposed under DMIC, the first investment region node falls in Greater Noida which is likely to heighten the industrial development of the region overall. Delhi-Mumbai Industrial Corridor, planned along the

42,254 industrial units

`7,000 crore investment

alignment of Western Dedicated Freight Corridor, is likely to provide further impetus to trade and investment in the region. In addition, possibility of development of logistic hubs at suitable places in the Noida, Ghaziabad and Greater Noida may be explored in short to medium term as it falls under the Dedicated Freight Corridor Project as both Ghaziabad and Gautam Buddha Nagar are a part of this corridor. Moreover, Uttar Pradesh is the biggest beneficiary of this project. Out of the total length of Eastern Corridor which is 2,700 km, the total stretch of the corridor in the state is 1,063 km. The eastern suburbs of Delhi also house large integrated industrial townships and Export Promotion Industrial Park (EPIP). An eminent apparel park is Tronica City which has been developed over 1,600 acres in Ghaziabad where land is available for industrial, residential, institutional and commercial sectors. It encompasses industry specific infrastructure, textile training centre, fashion design centre, quality control laboratory, workshop-cum-tool room, common effluent treatment plant, conference hall, hostel etc. Under the Central Government scheme for promotion of exports, two EPIPs are developed by UPSIDC in the state. One has already been developed on

42%

of regional GDP under manufacturing

400,000 workers employed

Credai Times

Real Estate Sector in Eastern NCR Suburbs

Industrial sector

`10,000

With the release of additional land parcels for development, the dominant areas that have emerged as IT corridors include Sector 62, Noida-Greater Noida Expressway, Knowledge Park IV and Technology Zone

crore revenue contribution of 5% in overall export revenue of India

29,000

jobs generated

in IT sector in Uttar Pradesh between January and December 2012

6 out of 7

operational SEZs in the region are IT-based

IT office inventory

Current stock

15 million sq ft

Future supply

30 million sq ft 74

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200 acres in Gautam Buddha Nagar where high standard infrastructure facilities have been provided including cement concrete road, integrated security system, earth station etc. One of the prime and most significant contributors to strong industrial base is IT/ ITeS sector in the region. A majority of IT/ITeS companies in Uttar Pradesh are located in Noida and Greater Noida due to their proximity to Delhi and availability of talent pool. Over the past decade, IT/ BPO sector has become regionâ&#x20AC;&#x2122;s premier growth engine contributing significantly in terms of revenue growth, employment generation and value creation. The region has emerged as a hub for ITES industries including software, captive business process outsourcing and electronics on the back of a robust IT policy of the state and proximity to other IT nodes of north India including Delhi and Gurgaon. The IT sector alone contributed for approximately 29,000 jobs in Uttar Pradesh between January and December 2012 of which it is estimated that 95 per cent of the total employment in IT-ITeS sectors was generated from the twin cities of Noida and Greater Noida alone. As per official statistics by STPI for 2010-11, Uttar Pradesh contributed approximately 5 per cent of the total export revenue of India in IT/ ITeS sector, majority of which is generated by Noida and Greater Noida alone. Cumulative revenue generated from exports is approximately `10,000 crore. The Noida Software Technology Park (STP) ranks second in the country in terms of export turnover and the Infotech Park (ITP) on 100 acres of land with state-of-the-art infrastructure, housing about 152-200 units make Noida the epicentre of IT revolution. This is in line with vast scale development activity observed in terms of commercial real estate in the region. The growth of large high-grade commercial IT/ ITeS developments can be witnessed in Noida and Greater Noida owing to proactive measures being taken up by the concerned development authorities in allocating land to private developers since 2005. Some of the IT/ ITeS companies, despite the restrictions on availability of quality real estate in the past, operated out of industrial sectors of Noida in small 20,000-25,000 sq ft factories in phase I Noida and Greater Noida. At present, the region flaunts

2016 is approximately 30 million sq ft. Aligning supply statistics of the region with likely demand, it is estimated the region is likely to generate approximately 300,000 jobs for IT personnel in another two-three years. With the release of additional land parcels for development by Noida and Greater Noida authorities, the dominant areas that have emerged as IT corridors include Sector 62, Noida-Greater Noida Expressway, Knowledge Park IV and Technology Zone. These regions are in the middle of fervent developer activity and house large IT office projects by reputed developers such as Unitech, 3C Company, Logix Group, DLF, Assotech and Maple Realty. With an increasing number of developments coming up along the Noida-Greater Noida Expressway and SEZs becoming increasingly critical for IT/ ITeS companies, Greater Noida has started witnessing demand from eminent IT/ ITeS companies and has gradually started emerging as a major growth belt. Noida

and Greater Noida have witnessed multinational companies like CSC, RMSI, Adobe, Cadence and ST Microelectronics taking up dedicated office space here but mainly restricted to industrial or institutional properties. The other prominent IT occupiers in the region are Intellevate, HCL, ST Microelectronics, EXL, CSC and Fiserv among others. In light of the much stable economic setup of the region, Eastern NCR is home to a large urban population base with a high disposable income. While urban population of Uttar Pradesh at a modest 22 per cent, urban population of the eastern suburbs viz Noida, Greater Noida and Ghaziabad stands upwards of 65 per cent. Similarly, while the growth in urban population for the state is close to 29 per cent, the growth in the two districts -- Ghaziabad and Gautam Buddha Nagar -- is 73 per cent and 126 per cent respectively which is much higher than other large and important cities of the state viz Lucknow and Kanpur.

a total stock of approximately 15 million sq ft already completed whereas future supply in Noida and Greater Noida proposed till

Credai Times

Real Estate Sector in Eastern NCR Suburbs

It sector performance

infrastructure status

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oupled with various government investments and policies promoting regional economics, modern infrastructure in line with the demand for high quality living and improved living standards have made Eastern NCR towns a destination of choice. Noida, Greater Noida (including Greater Noida West) and Ghaziabad enjoy quality physical and social infrastructure along with several new initiatives that are being undertaken. These are in the form of development of new amusement parks, recreational areas, education and medical facilities, trade marts, transport hubs, socio-cultural centres and special development zones among others. The twin cities of Noida and Greater Noida together house the best of education institutes comprising five universities viz Gautam Buddha University, Sharda University, Amity University, Galgotia University and JIIT (deemed), approximately 60-plus nationally renowned schools and over 90 colleges offering vocational, technical, management and other programmes. Greater Noida is developing Knowledge Park with the aim of providing quality institutional facilities for education and research. Greater Noida Authority has earmarked 1,400 acres for the Knowledge Park of which 870 acres has been developed as a Knowledge Park in Phase I of the Master Plan. These institutions include schools, management institutes, vocational training institutes and institutes for handicapped, maritime institutes etc. On the other hand, with development of Vaishali, Kaushambi and Indirapuram, Ghaziabad has become home to schools such as Delhi Public School, Cambridge, Ryan, Amity International, Greenfields, St Thomas, St Francis, DAV and Salwan among others. Overall, the city, at present, is an established institutional hub with 23 higher secondary schools, various colleges, seven engineering colleges, 18 management institutes, medical colleges and other vocational training institutes. In addition to the above, the entire NH 58 corridor till Meerut boasts of a variety of educational institutes. Coupled with provision of best education institutes in NCR, eastern suburbs also flaunt world class medical facilities abound

universities

Gautam Buddha University, Sharda University, Amity University, Galgotia University and JIIT (Deemed)

60+

Real Estate Sector in Eastern NCR Suburbs

Social

Schools

DPS, Cambridge, Ryan, Amity International, Greenfields, St Thomas, St Francis, DAV Public School and Salwan Public School

Colleges

with vocational, technical, management programs

Engineering Colleges

Management Institutes, medical colleges and other vocational training institutes

Credai Times

Real Estate Sector in Eastern NCR Suburbs

The region houses four among the five internationally and nationally recognised hospital chains viz Max, Fortis, Apollo and Care. Together, there are over 100 operational hospitals in eastern suburbs

7.6

1000

hospital beds per

person in Noida & Greater Noida

21% area under open greens/ recreational areas

Credai Times

Real Estate Sector in Eastern NCR Suburbs

eminent golf courses

with multi-speciality hospitals, nursing homes and other healthcare centres. The region houses four among the five internationally and nationally recognised organised hospital chains viz Max, Fortis, Apollo and Care. Together, there are over 100 operational hospitals in eastern suburbs cumulating to approximately 10,500 beds serving a population of approximately 3.3 million. This translates to a ratio of 3.23 beds per thousand population in the region which is likely to rise to 3.65 beds per thousand population once the Jaypee Hospital is operational. In Noida and Greater Noida, the ratio of beds per thousand population is even more ie 7.6 which is way above the national average of 1.9 beds and Delhiâ&#x20AC;&#x2122;s average of 2.2 beds per thousand population for the year 2012. With the opening of phase I of the Jaypee Hospital entailing 525 beds by the end of 2013, this ratio is likely to rise to 8.21 beds per thousand population. Apart from above social amenities, there are several proposals for creation of amusement parks and green spaces such as tot-lots at housing cluster level, parks and playgrounds at block/ sector level clubs, sports complexes, major green spaces at the community level and golf courses, integrated sports complex at the city level. Noida Authority has proposed to develop a world-class theme amusement and entertainment park in an area of 56 acres near Noida Toll Bridge and National Botanical Garden. Creation of such projects, coupled with already existing neighbourhood parks in the city, form large lung spaces within the region for the resident population. This would make the region class apart from other competing suburbs which are overcongested and lack greens and social infrastructure.

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he location attributes of Eastern NCR suburbs add up to rapid development with urbanisation levels, twice that of the national average and manifolds when compared to the state average. On the back of progressive land policy, Noida and Greater Noida have been identified among the most planned cities of India. These twin cities offer high standards of living, reasonably good per capita income levels in context of other NCR towns and a substantial supportive industrial and economic base. Medium population density, quality infrastructure and good connectivity are prime reasons for rise in the real estate activities in these cities. Therefore, the extent of development that was initiated in Noida has now gone up to Greater Noida and Yamuna Expressway. Owing to location attributes, strong and sustainable economic base and large-scale existing and proposed infrastructure initiatives coupled with flexible and favourable land policy, the region has become home to property buyers and

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levels

private developers of repute. The region hosts a wide range of options including integrated residential townships that offer fully developed plots, independent bungalows, high-rise apartments, pent houses and independent floors. Several well-known builders are involved in developing different parts of the region and ensure maintaining the infrastructural and architectural designs in tandem with the latest prevailing trends. Popular projects in the region include Jaypee Wish Town, Crossings Republik, Lotus Boulevard, Supertech Supernova and Wave City. Eminent developers such as Jaypee, 3C Company, Assotech, Amrapali, Logix, Supertech, Gaur, Mahagun and Ajnara are active in this region and observing good absorption and price escalations in their projects. At present, Noida proves to be the first choice of consumers as well as developers looking out for investments in eastern NCR on the back of its infrastructure, planning, location, connectivity, strong IT base as well variety of real

Noida is the first choice of consumers and developers looking out for investments in eastern NCR on the back of its infrastructure, planning, location, connectivity and strong IT base

Real Estate Sector in Eastern NCR Suburbs

Urbanisation

estate options to choose from. Therefore, in terms of preference within the region, Noida clearly takes a lead followed by Greater Noida and Ghaziabad. In terms of present location, investor sentiment and current sales of residential properties, Ghaziabad supersedes Greater Noida on all other parameters. Greater Noida surpasses Ghaziabad owing to its brilliant connectivity, scale and number of amenities. Additionally, city infrastructure makes Greater Noida as one of the most promising micro markets in medium term. Investor sentiment, too, has revived to normal in Greater Noida after controversies surrounding land acquisition and farmersâ&#x20AC;&#x2122; agitation have been resolved, especially in Greater Noida West (Noida Extension) area. New locations in Ghaziabad such as Raj Nagar Extension and area around Hi-Tech City along NH 24 have witnessed tremendous response from both investors and end-users owing to developer focus on affordable housing in stated pockets.

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real estate trends

he pricing trend across preferred locations in Eastern NCR vary between `2,500 and `7,000 per sq ft based upon location, infrastructure development and category of development. Raj Nagar Extension, NH 24 and Crossings Republik comprise more affordable residential options ranging between `2,900-3,250 per sq ft. These include projects such as

Capital Values across Micro Markets

Wave Hi-Tech City, Aditya World City, VVIP Addresses, Gulmohar Garden, Ajnara Integrity and Gaur Cascades. Micro markets such as Noida-Greater Noida Expressway, emerging sectors of Noida, Vaishali, Kaushambi, Indirapuram and Vasundhara offer premium projects in the price range of `4,500-6,500 per sq ft cumulatively. Luxury projects and projects with more premium specifications

14,000

Real Estate Sector in Eastern NCR Suburbs

Present

is the maximum base sale price in Noida

Preference Analysis Location Connectivity

Future Projected Sales

Investor sentiment

Infrastructure

Noida

Credai Times

Greater Noida

Ghaziabad

in these corridors even command on an upward of `7,000 -12,500 per sq ft. These include developments such as Lotus Boulevard, Jaypee Boomerang, Jaypee Pavilion Court, Unitech Grande, and Lotus 300. Regions such as Greater Noida West (Noida Extension) have gained importance at a fast pace since the issue between the farmers and developers has been resolved. Launched in a range of `1,600-1,800 per sq ft in 2010, projects located in this region command sale price between `2,800 and `3,500 per sq ft at present. The annual escalation trend in this micro market is similar to that of Noida-Greater Noida Expressway. The proposal of Metro up to Greater Noida West (Noida Extension) is one of the prime reasons attributed to such sharp price escalations and absorption trend observed here in a limited period of two to two-and-a-half years.

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supply statistics R

egional supply statistics indicate total residential inventory under various stages of development (planning, preconstruction, construction and ready inventory not sold stage) is approximately 400 million sq ft which is six times of the exiting residential stock. Future proposals are primarily

Supply Statistics (Million sq ft) 200

169.78

Existing Proposed

143.62

150

90.00

100

15 Noida

Greater Noida

Ghaziabad

Distribution of total residential supply in the region 26% Ghaziabad

35% Greater-Noida

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in majority launched projects

launched affordable units in Noida Extension alone

39% Noida

75% 125,000 absorption

located along Noida-Greater Noida Expressway, Noida Extension, emerging sector of Noida, Indirapuram, Raj Nagar Extension and near Hi-Tech City at NH 24. In addition, development of 12,000 affordable residential flats in the region has recently been declared by Greater Noida Authority and Yamuna Expressway Authority with opening of Yamuna Expressway. Land has already been identified and sanctioned for the proposed project. A total of 7,000 units in Greater Noida and 5,000 units along Yamuna Expressway shall be developed. Despite large future supply in pipeline, Noida and Greater Noida observe over 75 per cent absorption in majority launched projects especially along Noida-Greater Noida Expressway and other emerging sectors.

Real Estate Sector in Eastern NCR Suburbs

â&#x20AC;&#x201A; Regional

400

million sqft

total residential inventory

Credai Times

Noida

Quality projects,

substantial development

he supply statistics of Noida and Grater Noida indicate that in terms of equating to approximately 34 million sq ft of residential area by end-2012, the twin cities will witness a total existing residential inventory of 20,000 units by private developers. Projects that have already been completed over the past five-six years include Amrapali Grand, Golf Gardenia, Unitech Cascades, Vrinda City, Assotech Golf Greens, ATS Green Village, Supertech Pavilion, Pearl Gateway, Amrapali Exotica, Supertech Emerald Court, Eldeco Utopia and Windsor Greens among others. However, future supply of residential units amounts to around 270,000 in Noida and Greater Noida, almost 14 times more. Despite large future supply in pipeline, these twin cities observe over 75 per cent absorption in majority launched projects, especially along Noida-Greater Noida Expressway and earlier proposed FNG Expressway. Majority quality projects in Noida are concentrated along

times more

residential units for future

77,500 62,000 inventory along Expressway

alone constitutes of around

units

Credai Times

units

along the Expressway have already been sold on the back of excellent returns

the Noida-Greater Noida Expressway. This corridor observes substantial developments in premium residential segment such as Jaypee Greens, Omaxe Grand Woods, Unitech Grande, ATS Greens, Forest Spa, Parsvnath Prestige, Windsor Greens, Lotus Boulevard and Lotus Panache. Overall, the residential sector demand along this belt of Noida is a derivative of the commercial and IT sectors which is likely to remain robust over medium to long term. With a substantial number of IT/ ITES and corporate firms having established their offices nearby, the demand is expected to increase. Total inventory along the Expressway alone constitutes of around 77,500 units of which around 62,000 units are already sold out on the back of excellent returns to investors as this region observes 25-35 per cent escalation per annum on base sale prices. This further indicates a robust demand for residential development along Noida-Greater Noida Expressway owing to excellent connectivity and reduced commuting time coupled with affordable pricing. Jaypee Group has successfully launched their integrated residential project along the Noida-Greater Noida Expressway, spanning 1,162 acres. This project contains all the luxury features with golf courses and modern world-class amenities that range from low-rise and mid-rise to high-rise apartments. The development offers apartments across various categories ranging from luxury segment to mid-income projects. The developer has planned each individual project within the township as a secure gated community, however, has knit the entire development with recreational greens, commercial and institutional spaces, international standard healthcare facilities and various art and cultural galleries that combine sophisticated city living with a welcoming neighbourhood atmosphere. Another area witnessing substantial sales and developer activity falls in vicinity of the earlier proposed FNG Expressway and Noida-Greater Noida Link Road. These include sectors 70, 7479, 113 and 117-121. The micro market is abode to approximately 55,000 residential units in middle income category of which around 40,000 units have already been sold. In light of sustained demand since launch, majority projects witness an average annual escalation between 20-30 per cent in sale prices.

75%

absorption in majority launched projects

Preferred Investment Corridors in Noida/ Greater Noida Micro Market

Rank

Noida Greater Noida Expressway

Emerging Sectors viz. 74, 76, 77, 78, 112, 114, 117, 119

Noida Extension/ Greater Noida (West)

Yamuna Expressway

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Real Estate Sector in Eastern NCR Suburbs

Sub-regional assessment

Greater Noida

Eminent projects in Greater Noida Jaypee Sports City Assotech Golf Vista Apartments

Promising location,

decent returns

n terms of location, Greater Noida is the farthest to Delhi among the other two suburbs of Noida and Ghaziabad. However, residential real estate still assures decent returns in the coming years for properties purchased at reasonable rates. Moreover, a good rapid transport system proposed is likely to bring in the next spurt in prices and help in making Greater Noida a destination for premium property. Established residential development in Greater Noida is characterised by plotted as well as middle and high-rise apartments. Prominent residential sectors in Greater Noida (Phase I) are Alpha, Beta, Gamma, Delta, Omega, Pi, Rho, Sigma, Phi and Chi. Most of the upcoming projects are in the form of high or mid-rise group housing developments. Ansal Housing, Senior Citizen Society and Eldeco Golf View Apartments were among the first projects launched by private developers. At present, Ansals, Parsvnath, Eldeco, Uppals, Purvanchal, Ashiana, Assotech, Unitech and Omaxe are the major developers who are coming up with premium residential developments in Greater Noida. NRI city, a prominent development by Omaxe, has come up with an integrated township on 85 acres. Parsvnath Panorama, Parsvnath Eden Heights and Eldeco Amazona are the other eminent residential projects in the city. Residential complexes such as Amazon, Savannah, Gardenia and Verdana in Eldeco Green Meadows are almost 100 per cent absorbed with average occupancy of approximately 80 per cent. Established locations in Greater Noida constitute of approximately 30,000 residential apartment units in middle-income category of which around 23,000 units have already been sold, translating into average absorption of approximately 75 per cent in main Greater Noida.

The most promising location of these is Greater Noida West which is popularly known as Noida Extension. Flaunting a total inventory of around 125,000 residential units, the region observes absorption of approximately 55 per cent till date. Majority projects along this corridor were launched in and after 2010. Despite Greater Noidaâ&#x20AC;&#x2122;s sound planning and infrastructure, its distance has always been a big disadvantage. Noida Extension, on the other hand, lies in vicinity to the established sectors of Noida like sectors 32 and 62, at a driving time of 10-15 minutes. In addition, Noida Extension is well connected to NH 24, Lal Kuan in Ghaziabad and Anand Vihar in Delhi. Noida Extension evolved as a realty hub with majority of leading and regional developers providing affordable residential developments in sectors lying in immediate vicinity to Noida and adjoining River Hindon. The initial developments took place in sectors 1 and 4 that are located in direct vicinity to Noida. Initial developments in the region comprised of group housing developments with 1/2/3 BHK typology and an average price range of around `1,600-`2,000 per sq ft. These developments were primarily launched in 2009-2010 and included initial developments by developers such as Gaursons, Amrapali, Supertech, Earth Infrastructure, among others. The region has become choice of end-users and investors as the micro market comes under the ambit of Delhi Metro. The line, which is expected to be operational in the next two-three years, is likely to benefit those living in Noida Extension as it would provide seamless travel to the National Capital. Currently, the capital value in Noida Extension varies between `2,800-`3,500 per sq ft in majority projects.

Amrapali Grand Omaxe Palm Greens Jaypee Greens ATS Paradiso Unitech Horizon

125,000 Total launched residential units in Noida Extension

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Real Estate Sector in Eastern NCR Suburbs

Sub-regional assessment

Ghaziabad

Well-planned initiatives,

sustainable growth

t is evident that the structure of towns in context of proximity and connectivity to Delhi has made few micro markets more preferred over the others. In terms of city structure, Ghaziabad can clearly observe a divide identified as east and west Ghaziabad as it is bifurcated by River Hindon. Both locations have their own dynamic characteristics. As East Ghaziabad houses old established city and established plotted residential colonies such as Raj Nagar and Kavi Nagar, West Ghaziabad was predominantly industrial in profile. However, due to its proximity to the National Capital and more recently, the improvement in connectivity with it, large scale residential developments have mushroomed along this side of the city. Moreover, industrial units also observe conversion to organised retail malls and hotel developments. Congestion of residential colonies and increasing prices of houses in East Delhi and Noida, middle income population have contributed to the growth of west Ghaziabad. Today, it boasts of the most eminent locations in the city -- Vaishali, Kaushambi and Vasundhara. These colonies primarily comprise of group housing residential developments and more modern organised retail developments in the form of malls. Residential and

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commercial developments in this part of Ghaziabad have been developed by public sector organisations (GDA and UP Housing Development Board) as well as private developers. Some of the prominent developers active in the region include Ansals, Shipra, Assotech, Jaipuria, Parsvnath, Supertech, Gaur, Ramprastha, Ajnara, Amrapali etc. At present, with near-complete absorption and limited availability of fresh land in these pockets, Vaishali and Kaushambi are now commanding a premium price and have become preferred areas for residential and commercial purposes as compared to the other regions of Ghaziabad. Another private prominent development coming up in Ghaziabad includes Hi-Tech City by Chaddha Group. As per the Ghaziabad Master Plan 2021, approximately 2,185 hectares of land has been reserved for the development of a Hi-Tech city in Dasna. The entire project is proposed to be developed as IT-centric development, complete with all modern networking and infrastructure amenities such as golf course, schools, colleges, medicity, trade marts etc. Other township projects in the region include Aditya World City, Ansals Aquapolis and Ansal Megapolis. The projects are spread across 100-300 acres

Preferred Investment Corridors in Ghaziabad Micro Market

premium residential

projects under various stages of development in Raj Nagar Extension

Rank

Vaishali â&#x20AC;&#x201C; Kaushambi

Indirapuram

Vasundhara

Raj Nagar Extension

Crossings Republik

NH-24 Near Hi-Tech City

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Real Estate Sector in Eastern NCR Suburbs

Sub-regional assessment

Sub-regional assessment Ghaziabad

The region is gaining high relevance and significance in terms of real estate sector as individuals from all backgrounds are coming up for investments and end use purposes and shall comprise of multiple development typologies. However, the predominant residential typology for sale within these developments presently is residential plots. Rajnagar Extension, along NH 58, is another eminent growth zone of Ghaziabad that has, of late, taken attention of

Conclusion

investors and buyers. Owing to strategic location, it has become one of the most promising investment corridors of NCR. The location observes large quantum of residential supply primarily in the form of group housing developments. A large number of newer projects in Rajnagar Extension are large-scale comprising of more than 500 apartments and are offering all modern facilities and amenities. These developments are being developed to cater to affordable housing demand in NCR. However, with development of the area, some of the projects in this region are offering larger apartment sizes along with additional specifications and facilities to attract a relatively premium buyer. The most common typology offered by developers in the region includes 2/3 BHK accommodations ranging between 800-2,200 sq ft. Four-BHK homes are also coming up as a prominent development typology which are being offered in an area range of 1,800-2,700 sq ft, especially in newer projects. Residential projects in Rajnagar Extension observe fair absorption levels, highlighting a healthy demand and preference for this location. Moreover, year-on-year supply within this micro market is also increasing at a steady rate with multiple new and large scale projects launched every year. Further, these projects have witnessed an annual increase of approximately 20-25 per cent in base sale price. As of date, upwards of 40-plus premium projects are under various stages of development and construction and are likely to cater to upward of 20,000 families.

Overall, the region is gaining high relevance and significance in terms of real estate sector as individuals from all backgrounds are coming up for investments and end use purposes. Several well-known and experienced builders are involved in developing Eastern NCR. They have established strategically appropriate plans followed by well-managed execution. This is evident from the growth of real estate sector in the region. Majority projects showcase high standards of living and infrastructure along with presenting them at affordable prices. Strategic location of Ghaziabad, growth in real estate prices in Delhi, commercial growth in Noida as well as proposed infrastructure initiatives shall continue to provide the impetus for growth of the region in the near future. Further, with planned initiatives to attract commercial investment such as the Hi-Tech city, Jaypee Sports City, Jaypee Wish Town, Raj Nagar Extension and Greater Noida West, the region is likely to witness sustainable development and growth in the long run.

future

The right

move The Government allowing Foreign Direct Investment in real estate sector to raise the standard of living of Indian citizens has worked wonders and the future seems really bright

he real estate sector is a critical sector of our economy. It has a huge multiplier effect on the economy and therefore, is a big driver of economic growth. It is the second-largest employment-generating sector after agriculture. Growing at a rate of about 20 per cent per annum, this sector has been contributing about 5-6 per cent to Indiaâ&#x20AC;&#x2122;s GDP. Not only does it generate a high level of direct employment, but it also stimulates the demand in over 250 ancillary industries such as cement, steel,

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The focus on ‘affordable housing’ helped the sector tide over financial crunch

paint, brick, building materials, consumer durables and so on. The Indian real estate sector has been on a roller-coaster ride since 2005. Consequent to the Government’s policy to allow Foreign Direct Investment (FDI) in this sector, there has been a boom in investment and developmental activities. The sector not only witnessed the entry of a number of new domestic realty players but also the arrival of many foreign real estate investment companies including private equity funds, pension funds and development companies that entered the sector, lured by the high returns on investments. The real estate sector has been riding through many highs and lows since then. The industry achieved

new heights during 2007 and early 2008, characterised by a growth in demand, substantial development and increased foreign investments. However, by mid2008, the effects of the global economic slowdown were evident here too, and the industry took a ‘U’ turn. FDI inflow into real estate dropped significantly and what had emerged as one of the most promising markets for foreign investments experienced a downturn.

Financial support to the sector During the financial years 2007-08, 2008-09 and 2009-10, the housing and real estate sector attracted FDIs of 8.9 per cent, 10.3 per cent and 11 per cent respectively, of the total FDI in India.

However, the financial year 2010-11 saw 6 per cent FDI in this sector. The year 2010 witnessed Indian real estate sector spring back into action after the gloom and recessionary pressures experienced in the aftermath of the global downturn. The focus on “affordable housing” helped the sector tide over the financial crunch it had witnessed during the previous years. There is no doubt that the sector holds huge potential to attract FDI in various segments. However, progress is possible only with the joint efforts of both the sector and the Government. On the one hand, the sector should work towards increased transparency, clear land titles, improved delivery and project execution while on the other

FDI IN INDIAN REAL ESTATE The FDI in Indian real estate sector is permitted through the automatic route across all real estate segments except agricultural and plantation properties subject to the conditions mentioned below Regulatory Framework - Minimum Capitalisation • For wholly owned subsidiaries – US$ 10 million. • For Joint Ventures with Indian Partners -US$ 5 million, to be brought in within six months of commencement of business. • Original Investment cannot be repatriated before a period of three years from completion of capitalisation. • The investor may exit earlier with prior approval from Foreign Investment Promotion Board (FIPB). Minimum Area Requirements • Minimum land area to be developed is case of serviced housing plots is 10 hectare or approximately 25 acres. • In case of construction development projects, a minimum built-up area of 50,000 sqm. • In case of a combination of the above two projects, any one of the above two conditions should suffice. This limit has been brought down from 100 acres that was required to invest in integrated townships subject to FIPB approval. • At least 50 per cent of the project to be developed within five years from the date of obtaining all statutory clearances. • Investor cannot sell undeveloped plots where roads, water supply, street lighting, drainage, sewerage and other convenience are not available. Other Amendments • IT/Business Park: Foreign investment in IT parks subject to such IT parks providing space to, at least, three tenants. • Industrial/logistics/warehousing: FDI policy in these properties is liberalised and now foreign investors can invest in them at the construction stage subject to a minimum of 50,000 sqm. In addition to the above, the guidelines have also been relaxed for investment by foreign & domestic venture funds in real estate. Venture funds fall under the Foreign Institutional Investment (FII) category rather than FDI and have to be registered with the SEBI. Venture funds can invest in real estate if each investor brings in not less than US$ 11,111 and eighty percent of the funds are invested in companies not listed on the stock exchanges or financially weak companies. Key regulatory developments • Securities & Exchange Board of India (SEBI) has allowed Indian venture capital firms to invest in real estate. • 100 per cent Foreign Direct Investment (FDI) is now allowed in the construction sector under automatic route. • Foreign investors can now invest in commercial real estate development projects having minimum built up area of 50,000 sq m. • Minimum area threshold for FDI in Integrated Townships reduced to 25 acres from 100 acres. Because the lower threshold is more manageable by the first time foreign investor. • Minimum equity investment cap of $10 million for 100 per cent FDI projects and $5 million in Joint ventures. • Foreign investors only barred from trading in undeveloped land. • Another significant change is the removal of sectoral restrictions. The scope is expanded to cover residential, commercial or shopping malls. The new guidelines for India can trigger an investment of $1-1.5 billion annually.

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hand, the Government must provide fiscal incentives to developers to build low-cost and affordable housing for the masses and also review the existing FDI guidelines for investment and development in Indian real estate in order to increase the flow of foreign capital into the sector.

Boosting r&d in real estate

There is an urgent need to introduce reforms to boost the real estate sector

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The Government must provide incentives to the public and private sectors to take up R&D activities for new building materials and technologies so that the sector can deliver low cost, affordable, sustainable and environment friendly housing and building structures.

Government regulations and changes required

The Government of India vide Press Note No. 2 of 2005, permitted FDI up to 100 per cent, under the “automatic route” in townships, housing, builtup infrastructure and construction development projects. The main reason for opening up the real estate sector to 100 per cent FDI was to bridge the huge shortage of housing in the country and to attract new technologies in the housing sector. The original FDI

guidelines issued vide the above press note attracted large amounts of foreign funds to Indian real estate sector. However, subsequent amendments to the FDI policy relating to real estate have created unwanted apprehensions and confusion in the minds of global investors, thereby affecting FDI inflows adversely. Further, lack of consistency in rules relating to development of SEZs, increased monitoring of the sector by regulatory agencies, tightening of rules for lending to the real estate sector and increase of key rates by the RBI several times during the last one year, have arrested the growth of the sector. There is a need to streamline Government policies and introduce reforms to boost the real estate sector.

The challenges

The major challenges the Indian real estate sector is facing today are: • Lack of clear land titles, • Absence of title insurance, • Absence of industry status, • Lack of adequate sources of finance, • Shortage of labour, • Rising manpower and material costs, • Approvals and procedural difficulties.

The Indian real estate sector has traditionally been an unorganised sector but it is slowly evolving into a more organised one. The sector is embracing professional standards and transparency with open arms. The major established domestic players in the sector are DLF, Unitech, Hiranandani Constructions, Tata Housing, Godrej Properties, Omaxe, Parsvanath, Raheja Developers, Ansal Properties and Infrastructure and Mahindra Lifespace Developers Ltd to name a few. International players who have made a name for themselves in India include Hines, Tishman Speyer, Emaar Properties, Ascendas, Capitaland, Portman Holdings and Homex.

The road ahead

India has huge potential to attract large foreign investments into real estate. With real estate reaching a point of saturation in developed countries and the demand and prices falling, global real estate players are looking at emerging economies such as India for tapping opportunities in real estate. Indian real estate will stay attractive due to its strong economic fundamentals and demographic factors. Moreover, there is a high level of global uncertainty looming over the developed and developing nations of the world. While developed economies are still struggling to regain their growth momentum, developing countries including India and China are expected to grow at a reasonably high rate. Investments in Indian real estate will fetch higher returns for investors as compared to other global markets. In the coming years, the opportunities in the real estate sector will attract more global players to India and hence will help the industry to mature, become more transparent, improve management and adopt advanced construction techniques.

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technology

Tech-savvy

transformation Minu Agarwal and Vinod Singh shortlist three reasons on how we should prepare to adapt to changes brought about by technology in the real estate sector

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Figure 1

echnology is entering our lives like never before, especially in the field of information technology. We have an unprecedented and easy access to information from across the world. And even the reverse has become true. The world has access to our opinions and choices through social media. Technology is affecting how we plan vacations, how we shop, where we shop and even what we eat (do you have the calorie counting app on your smart phone?). The penetration of technology into our lives is immense and growing at a rapid pace. Being on

the demand or the supply side of the equation makes no difference when it comes to analysing how this penetration will change the way we do business: of buying or selling. Among several others, here are three reasons on how, as real estate professionals, should we prepare to adapt to the changes brought about by technology in our lives.

Online reviews

People today are writing reviews for almost everything they pay for, from services to food to brands. Earlier, if you found a roach in your food in a restaurant, you could only warn your Figure 2

Figure1: Comparison of online interest (Google Search Trends) in “real estate forums” (2004-2013) across the world. Interest in India is the highest. Figure 2: Online search interest (Google Search Trends) in “flipkart” (an online retailer in India)

circle of friends. Now you can share it with the world. Online forums gather similar users at one place and allow for even more focussed discussions. In fact, it can be used for soliciting personal and more specific feedback. For some reasons, the culture of forums seems to be more dominant among us Indians than the rest of the world. Online search trends show that there is great interest in India for real estate forums (Fig 1). Users here exchange feedback regarding developers and specific projects. Checking online reviews and forums has become almost essential to all home buyers with access to Internet.

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In all its lack of transparency, the issue of information asymmetry in real estate markets is fading away fast when it comes to information sharing within the demand side ie among buyers. Despite virtually no “lemon laws” for real estate, it is challenging to keep the next customer from the mess up with the previous one, if any. The strategy is clear: highest degree of honesty and ethical standards. But what are those standards? This question is well suited for CREDAI!

Today, you can search for a home on the Internet

Online shopping

With 1.2 million Internet users, online sales in India are already estimated at $10

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Figure 2a: Online search interest (Google Search Trends) in “Snap Deal” (an online retailer in India)

billion. You don’t have to go the shop and find out that they have run out of what you wanted to buy. You don’t have to go to that mall 25 km away struggling in traffic for hours for your favourite brand. Shopping is a click away. If you don’t have a mall in your city, that does not hold you back from buying your favourite product. An Internet connection can get you anything. In fact, the Internet has become a means of empowerment, helping us leapfrog into future (fig 2 and fig 2a). Developers looking into retail sector could and perhaps should account for this phenomenon in their market analysis for future projects. Impact of online shopping is already seems in countries with deeper internet penetrations such as the USA. Online shopping continues to grow there,

Figure 3

Figure 3a

replacing retail stores such as those for books and electronic goods. Hence, a somewhat reduced demand for retail display space in some sectors could be likely while more warehouse/delivery centres could be required instead. These online retailers would also need more data centres to run their operations.

Online deals and google

Is real estate really local anymore? Online discounts are getting people out to restaurants that don’t fall in their usual path, try a new home furnishing boutique that they otherwise wouldn’t reach out to? Has real estate become more equal? Is location no longer the prime factor? A restaurant in a non-prime location can now compete with those in the hottest location with online marketing, by grabbing more online space. While some experts contest the impact of online deal offering website to long-term expansion of customer base of business, the power of search engines in dissemination of information cannot be ignored (fig 3/ 3a). Google adWords has created many success stories when small business owners with modest budgets have been able to reach much larger customer bases than they ever thought possible!

Figure 3: The USA search trends (Google Search Trends) for Groupon and Living Social websites that offer online deals for local businesses and restaurants Figure 3a: Savvy shoppers can now see which stores are near them and if they carry what they need before heading out to shop

The authors are founding partners at Realism Real Estate Consultancy Pvt. Ltd. (realism.IN ). realism.IN is an India focused real estate research and education firm. Please explore more at http://www.realism.in

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News

from the various chapters of CREDAI

karnataka

Wake up, clean up Bengaluru

Delhi-NCR

New leadership at CREDAI-NCR avows to take the mandates of Confederation proactively

Open deliberations at Open House Meeting An Open House meeting was organised by CREDAI Bengaluru at Sigma Hall, Hotel Chancery Pavilion where 57 member companies took part in discussions on various topics related to the real estate sector. A power point presentation was arranged on Green Building Movement in India by CREDAI Bengaluru member, Beary’s Properties’ CMD and IGBC Karnataka Chapter chairman Syed Beary. Since its inception, CREDAI Bengaluru has encouraged such initiatives for open deliberations among members represented by promoters/ directors/ top management of member companies for better future.

Pre-Budget Memorandum submitted CREDAI Bengaluru president R Nagaraj submitted a pre-budget memorandum 2013-14 letter to Chief Minister Jagadish Shettar and Commissioner, Department of Commercial Tax, during a meeting on January 21 at the Conference Hall, Vidhana Soudha, Bengaluru. Vice president JC Sharma, secretary Suresh Hari, joint secretary Siddique Beary, S Faisal Fizvi, Kishore Jain and CEO Anil Nayak, along with 40 industries and trade body associations, were present during this meeting.

An initiative of BBMP, ‘Wake up, Clean up Bengaluru, and supported by CREDAI Bengaluru for developers, property facilities management companies, apartment and residents and Resident Welfare Associations was inaugurated by Karnataka chief minister at Freedom Park, Gandhi Nagar, Bengaluru on February 3, 2013. The week-long programme, exclusively arranged on February 8 for developers, was attended by CREDAI Bengaluru president R Nagaraj, president elect CN Govindaraju, secretary Suresh Hari, joint secretary Siddique Beary, CREDAI Bengaluru member KK Malpani, past presidents A Balakrishna Hegde and Ramani Sastri, past secretary Shankar Sastri, CEO Anil Nayak, Naresh Kumar and other members of CREDAI Bengaluru.

Andhra Pradesh

CREDAI Guntur chapter inaugurated On January 25 this year, the Guntur Chapter of CREDAI was inaugurated in the presence of Minister for Municipal Administration & Urban Development Maheedhar Reddy, the chief guest on the occasion and Minister for Agriculture Khanna Laxminarayana, the guest of honour. Builders from other municipalities like Mangalagiri, Tenali, Baptla, Chilakaluripeta, Narsaraopeta also participated in the inaugural event.

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Special guests at the event were CREDAI AP president C Sekhar Reddy Garu, Guntur East MLA Sk Mastanvali Garu and GMC commissioner K Sudhakar Garu. CREDAI Kakinada Chapter organised a three-day Home Expo 2013 with 80 stalls at Kakinada on January 25. It was inaugurated by Minister for Registration & Stamps Thota Narsimham who was the chief guest while MLA Dwarampudi Chandrasekhar Reddy was the guest of honour.

CREDAI-NCR recently announced the appointment of Amrapali Group CMD Anil Sharma as its president for 2013-15. He succeeds the astute and successful domain of Pankaj Bajaj. On the occasion, the members of the association elected three vice presidents, a secretary, a joint secretary and a treasurer. The new CREDAI-NCR leadership team will now have Manu Garg, RC Gupta and Gautam Bhalla as vice presidents, Manish Agarwal as secretary, Pankaj Goel as joint secretary and Ajay Singal as treasurer. The newly-elected team acknowledged the umpteen task of incorporating a defined new order in working towards the challenges faced by the sector of economy thereby strictly adhering to the preambles, the guidelines and the mission, vision and philosophy of the Confederation. As such the governing body chaired by Anil Sharma laid out its road-map, priorities and challenges before the Governing Council. Outlining the way ahead, Sharma said, “Despite bottlenecks and challenges, the property market of Delhi-NCR has experienced an upward trend. We would strive to keep this going. For customers, we will continue to be committed towards transparency and would certainly be proactive in addressing their grievances and expectations and they will see more affordable housing projects in near future.” After this election, the newly-elected team of office

bearers/ executive committee then nominated the following members to the Governing Council Board of CREDAI NCR: Pankaj Bajaj (immediate past president), Rohit Raj Modi (immediate past secretary), Getamber Anand, Sanjeev Srivastva, Prashant Solomon, Manoj Gaur, Vishal Gupta, Rajeev Talwar, Pranav Ansal, Pradeep Jain, KK Goel, Kamal Taneja and Sunil Goel.

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News West Bengal

Realty Expo 2013

Real estate workshop held in Kolkata CREDAI Bengal and ILEAD jointly hosted a workshop on “How to take your Real Estate Business to the Next Level” on March 2-3 at the ILEAD campus, Kolkata. The workshop served as an educational platform for those belonging to the real estate sector to get enlightened on many important subjects pertaining to it through multiple technical sessions. The weekend workshop was jointly inaugurated by CREDAI Bengal president Harsh Vardhan Patodia, chairman PS Group Pradip Chopra and Lafarge associate director YK Gupta. Several members from the Eastern India chapters of CREDAI -Raipur, Patna and Ranchi were in attendance in large numbers. The technical sessions were an exciting manual to the interesting aspects of real estate business. There were video presentations on novel construction techniques, cost-saving constructions, new technologies in business and inspirational and a holistic dissertation on familymanaged businesses which member participants found useful and entertaining.

Impact of union budget 2013 on real estate Like every year, this year’s Union Budget too threw up many aspects which deserved detailed understanding and analysis. For the real estate sector in West Bengal, it were the newly-introduced Section 43CA and clarifications under Section 56 and 50C which merited a thorough dissection apart from detailed listings of proposals and new policies. So CREDAI Bengal joined hands with KPMG for a post-Union Budget analysis amd its implications on the real estate sector. This special session by KPMG was held at the Bengal Club on March 18. Asrujit Mandal, director, Tax and Regulatory (corporate tax) and Sanyukta Singh, manager, Indirect Tax presented the session. After the keynote address by CREDAI Bengal president Harsh Vardhan Patodia, the attendees were briefed on taxes and benefits concerning policy developments, highlights of the economic survey, policy proposals, relevant direct and indirect tax proposals. During the question hour session, attendees asked questions on topics ranging from indirect to direct tax incentives.

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The sixth edition of Realty Expo, the largest property fair in eastern India was held at Milan Mela between February 22 and 25. The event was inaugurated by minister-in-charge (transport and sports) Madan Mitra. Also present were CREDAI Bengal president Harsh Vardhan Patodia, vice presidents Nandu Belani and Sushil Mohta, immediate past president Pradeep Sureka, senior members SK Himmatsinghka, Mahesh Agrawal, Prem Jain, Rahul Gupta and Ashok Jaiswal. As always, the USP of Realty Expo 2013 remained the unmatched array of various genres of poroperties that a customer could not only compare and choose between in the same price segment but also consult with a bank right at the venue to enquire about the possibility of getting a home loan. The Expo was attended by over 14,000 visitors. On the last day, prizes were given away for the best stall by virtue of its aesthetics, functionality and consumer-friendliness.

Bengal Builds highlights real estate sector problems before chief minister Mamata Banerjee A three-day conclave on Urban Infrastructure Development, Bengal Builds, was successfully hosted jointly by the Government of West Bengal and Confederation of Real Estate Developers’ Associations of India (CREDAI) Bengal between November 29 and December 1, 2012, at Milan Mela, Kolkata. Bengal Builds had germinated with the objective of engaging with the present government in a bid to make conspicuous some of the issues plaguing the sector and also to highlight the transformational role of the sector vis-à-vis its huge revenue and employment generation capacity and the integral role it plays in infrastructure creation beyond the ambit of housing. The summit gave realty developers of the state an opportunity to press themselves before chief minister Mamata Banerjee. The organisations that copresented the event were Kolkata Metropolitan Development Authority (KMDA), Housing Infrastructure Development Corporation Limited (HUDCO), Nabadiganta Industrial Township Authority (NDITA), AsansolDurgapur Development Authority (ADDA), Haldia Development Authority (HDA), Siliguri-Jalpaiguri Development Authority (SJDA) and West Bengal Highway Development Corporation Limited (WBHDCL). Bengal Builds had envisioned development regeneration in the state through sustained infrastructure building and had been planned with the objective to trigger growth potential. As a major calendar event, Bengal Builds will be remembered as three days of immense brainstorming for the shaping up infrastructural dreams which would ultimately lead to a better Bengal. The response to the event and the active participation of

all concerned both in the exhibition and the seminar made Bengal Builds journey a memorable one. One is hopeful that the newly-formed task force, as announced from the Bengal Builds stage, would serve as a kind acknowledgement of the state

government to involve infrastructure creators in future policy-driving and ultimately aid in delineating a strategy to carve out policy frameworks to mitigate the challenges thrown up by the demand for social and urban infrastructure creation.

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News Maharashtra

Unleashing the next wave of real estate development in Maharashtra CREDAI-Maharashtra organised a training programme for the benefit of the members of city associations on February 22-23 at Lavasa, Pune, with the motto to Unleashing the Next Wave of Real Estate Development in Maharashtra. The seminar was attended by more than 450 members from all over the state and archived a grand success from the feedback received from the participants representing 21 cities. This was for the first time that such a large number of members attended an convention organised by the State Federation of Builders/ Developers Association. The subjects covered in the seminar by the eminent speakers included Challenges and Opportunities in Infrastructure & Real Estate Development to support progress by Hindustan Construction Company Limited chairman Ajit Gulabchand and Kumar Urban Limited chairman Lalit Kumar Jain; Providing Vision and Promoting Cities: New and sustainable systems and practices in City Governments in Developed Countries by PCMC commissioner Shrikar Pardeshi; Luxury Real Estate: Marketing, Branding & Leasing by Panchshil Realty chairman and CEO Atul Chordia; Presentation on Kushal Training Programme by Shroff Group owner and director JP Shroff; Proposed Acts, Rules & Regulations affecting Real Estate Business by Kalpataru Construction director Suhas Merchant, Ambience Promoters & Developers Pvt Ltd director Rajesh Choudhari and Naiknavare Developers director Hemant Naiknavare; Effective Joint-Venture Arrangement on Luxury Housing by Marvel Realtors CMD Vishwajeet Jhavar, Dreams Group on Affordable Housings director (sales & marketing) Rajesh Kothari and Magarpatta on owner MD Satish Magar;

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Pulse polio vaccination camp for construction site labourers’ kids CREDAI Pune Metro organised Pulse Polio Vaccination Camps for the children of construction site labourers. These camps were held at 324 construction sites (CREDAI members’ projects) across Pune district where more than 25,000 children were given polio drops. The inauguration event was held at the Amrut Ganga Site of Goel Ganga Group on Sinhagad Road. Present on the occasion were World Health Organisation, Pune Senior

Medical Officer Dr Narula; Labour Welfare Committee chairman Anuj Bhandari; Immunisation Officer, Health department, Pune Dr Sanjeev Wavare, and CREDAI Pune Metro director Dr DK Abhyankar. Speaking at the occasion, Dr Narula said, “Today, there are no cases of polio but we must consistently work in order to never come across one. CREDAI’s initiative is appreciable step towards eradicating polio completely.”

Master checkup camp for staff of builders and developers

Future of Real Estate in Maharashtra by Hiranandani Group of Companies MD Niranjan Hiranandani; Accounting Practices, Private Equity and Capital Market by Capital Markets by Jones Lang Lasalle managing director Shobhit Agarwal and Nishith Desai Associates’ Ruchir Sinha; Survey Search & Seizure: Income Tax, Service Tax and VAT by VL Jain & Co on Income Tax founder and

seniormost partner VL Jain, Chartered Accountant on Service Tax Sagar Shah and Chartered Accountant on VAT Prem Chatpar; Effective Site Management & Construction Cost-Saving & New Construction Technologies by Magarpatta technical director Umesh Magar and Nyati Group CMD Nitin Nyati and Branding and Marketing Strategies by DS Kulkarni Developers Ltd director DS Kulkarni.

CREDAI-Pune Metro has been conducting CSR activities on a regular basis which includes organising health checkup camps. Moving one more step ahead from regular health checkup camps, it conducted a master checkup camp not only for directors/ partners but also for staff of builders/ developers and their family members. This time, CREDAI organised a Master Checkup Camp for the staff of Vasudha Landmarks at Vasudha House in Baner. More than 50 staff members underwent a complete health checkup. Present on the inauguration of the camp were Umesh Kothawade (Wani), MD of Vasudha Landmarks, Anuj Bhandari, Dr DK Abhyankar and other labour welfare committee members. Speaking about the Master Checkup Camp, Bhandari said, “Health issues must always be seriously addressed. One can never predict an upcoming accident and hence it’s always better to take appropriate precautions at the right time. The Master Checkup plan will enable the staff members to get a complete checkup done and prevent from any health risks.”

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News New Delhi

Milestones

CREDAI’s extraordinary general body meeting The Extraordinary General Body Meeting of CREDAI at Sovereign Hall, Hotel Le Meridien, in New Delhi on March 30. All the members were welcomed on the occasion by Pradeep Jain. At the outset, he mentioned that under the dynamic leadership of Lalit Kumar Jain, CREDAI team has been working very hard on various important issues confronting the real estate sector and that CREDAI has consolidated to reach 128 cities in 22 states through 20 member associations with a total membership of over 9,000

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members which has almost doubled since this team had taken over around two years back. For wider representation at the national level and to have focussed, concentrated and result-oriented deliberations, CREDAI had formed over 30 sub-committees to take care of various issues and respective agendas which has helped CREDAI to emerge as a robust organisation ready to confront challenges and face them head-on, be it draft policies of the Government or resolving issues through Consumer Redressal

Forums to give customers of real estate the best and fair deals. Pradeep Jain drew the attention of all present to apprise that CREDAI, in these two years, has delved into almost every aspect of eeal estate and given representations to the Central and state governments for redressal of issues and offered assistance to the authorities in making better policies and doing away cumbersome transactions so that transparent and timely delivery of commitments could be expedited.

CREDAI has undertaken various initiatives to mobilise branding, image makeover and recognition of its members, some of which are Code of Conduct for self-regulation and setting up of Consumer Redressal Forums through its city chapters; submitted draft model building and development for single window approval concept to the concerned Central ministries and departments and the same was so extensively publicised that it reached all the states; CREDAI declared that

housing can be made affordable if single window concept is implemented by the government; CREDAI propagated carrying of its logo on all ads of the member companies; taxation issues, which has an impact of 33 per cent on total cost which includes rationalisation of taxes, avoidance of double taxation, uniformity in service tax and VAT, tax holiday for housing projects, industrial parks and townships of 10 acres or more under 80-IB(10), 80-IA(4) and 80 IA respectively.

»» A historic interactive meeting with Competition Commission of India. »» CSR activities through its member associations wherein CREDAI member associations have received a lot of recognition from state government and other authorities. »» CREDAI’s partnerships with eminent brands for the benefit of the real estate sector »» CREDAI-GRIHA and CREDAI– IGBC collaborations to promote green building and educational and awareness programmes for the construction of green buildings »» CREDAI-IIM Bengaluru signed Memorandum of Understanding – for preparing real estate professionals for their transformation towards visionary leadership through a business leadership programme. »» A historic event in the form of a Round Table Conference, organised by CREDAI and HUDCO which was presided over by Arun K Misra, secretary, Ministry of Housing and Urban Poverty Alleviation, Government of India, on affordable housing was held on February 25-26 2012 in Goa. »» CREDAI has since published a book on affordable housing that includes presentations, suggestions, recommendations and the outcome of the Round Table Conference which has been submitted to the Ministry of HUPA and other concerned ministries at the Centre and state levels. »» To make Mission Transparency a buzzword in construction sector »» To increase the scope of research in realty and construction sector »» Sushil Mantri has set an example by creating uniform documents on best practices and has also given fillip to CREDAI’s website.

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News NEW DElhI

CreDAi journal renamed CreDAi timeS

During this meeting, Pradeep Jain drew the attention of the members to the CREDAI Journal that was being published under the guidance of Balakrishna Hegde who has been instrumental in bringing it up to world-class standards. He proposed and suggested that the journal be changed to a magazine and the name too should be changed from Real Estate Review to Credai Times. Thereafter, the magazine has transformed with fruitful editorial Choosing the right and reading material. The work of Balakrishna Hegde has received accolades for the same. This responsibility has now been entrusted to Sanjeev Srivastva who has brought out the last two editions of the magazine. January-March 2013

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successful representation on various committees and task forces of the government »

Member of Steering Committee on Urban Development of Planning Commission of India for 12th Five Year Plan. Member of the task force for developing transparent qualified criteria and a separate set of Guidelines for Affordable Housing in PPP projects. Member of the project steering committee for the project on UNDP/GEF assisted Global Solar Water Heating Project being implemented by Ministry of Renewable Energy. CREDAI represented before the Standing Committee on Land Acquisition & Rehabilitation & Settlement Bill and was successful in communicating its concerns that ‘private purchases’ should be excluded as it is purchase.

the new governing body of credai

(Top row): Lalit Kumar Jain, CREDAI chairman and CMD, Kumar Urban Development Ltd; C Shekar Reddy, President, CREDAI; MD, CSR Estates Ltd; Getamber Anand, president elect, CREDAI & MD, ATS Group; Jaxay Shah, vice president, CREDAI & MD, Savvy Infrastructure (P) Ltd.; Sanjeev Srivastva, vice president, CREDAI & MD, Assotech Limited; Sushil Mantri, vice president, CREDAI and CMD, Mantri Developers (P) Ltd.; Satish Magar, vice president, CREDAI & CMD, Magarpatta Township Development. (Bottom row): Harsha Vardhan Patodia, vice president, CREDAI & MD, Regent Hirise (P )Ltd; Vijay Mirchandani, honorary secretary, CREDAI & MD, Mirchandani Group; Anurag Sharma, honorary joint secretary, CREDAI & director, Alokik Buildcon (P) Ltd; DS Tripathy, honorary joint secretary, CREDAI and MD, Lord Real Estates Developers & Builders (P) Ltd.; Shekhar G Patel, honorary treasurer, CREDAI and MD, Ganesh Housing Corporation Ltd; Amardeep Singh Hira, Chairperson, Co-ordination Committee CREDAI Youth Wing & Chairman, Shivalik Group of Companies

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formation of credai youth wing

The formation of CREDAI’s youth wing was the brainchild of Lalit Kumar Jain which he suggested during third quarter of 2012. The main idea was to infuse new zeal, vigour and thoughts into the mainstream through which CREDAI brand can take to further heights. Pradeep Jain mentioned that the amount of energy, time and expertise put in by the chairmen of various sub-committees, the list is so large that to mention everyone’s name is difficult but all are really worthy of appreciation. An event was organised after EGM in which the new team of office-bearers for the term beginning April 1, 2013, till March 31, 2015, was installed, a coffee

table book was launched and the CREDAI Youth Wing Board was installed by Arun Mishra, secretary (housing) who was the guest of honour. The event was attended by Sushil Kumar, additional secretary (housing) and Dr BR Mani, additional director general, Archaeological Survey of India. The congregation was addressed by CREDAI chairman Pradeep Jain, CREDAI president Lalit Kumar Jain, incoming new president C Shekar Reddy and vice presidents Getamber Anand and Jaxay Shah. Their speeches demonstrated the conviction of CREDAI and accomplishment of the responsibilities to which CREDAI was committed. A

promise was evident from their speeches for the real estate sector in the future. CREDAI’s role to shape up the realty sector would be significant and it was announced that CREDAI will contribute to its maximum as a mentor for its members and a helping hand for the Government. During his speech, Mishra mentioned that during the past two years, CREDAI had contributed a lot and helped the Government with vital inputs on various fronts for the real estate industry about which Lalit Kumar Jain eloquently mentioned in his speech. He mentioned that with CREDAI’s contributions have been immense in the past and that the three Task Force Reports ie affordable housing, rental housing and simplifying of processes will be submitted in the Ministry which it is hopeful of getting implemented in the coming couple of years. The Vote of Thanks was delivered by Getamber Anand, vice president, CREDAI. In addition to thanking all the dignitaries on the dais and the friends from the media, he congratulated the incoming new team and he mentioned that actually it is the members of CREDAI who are the ones because of whom they are what they are in the organisation, as their representatives. This followed a huge round of applause and the event came to a close with memento presentation to the Government dignitaries.

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development

The big

shift

With summer setting in, the property market witnesses an upward swing. By Vivek Shukla

s summer arrives here with all the fury, the realty market is likely to witness a flurry of activities. After all, the season is considered as the best time when people shift to new abodes and go all out in order to find new homes for themselves. Incidentally, summer is also the time of transfers and

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relocations, especially due to the fact that it is easier to get an admission for your school-going kid to an educational institution. You would have also observed that a number of your neighbours, who were tenants in the house next door, move to a new home. So is anyone of your neighbour moving out or a new family has occupied a flat close to you in recent weeks? If the mercury is soaring, the chances of the number of visitors to the local property dealer or on the innumerable real estate-related websites automatically increase. “It is true that between April and June, property transaction remains

extremely high. Also, during this period, the auspicious Navratras arrive which are considered the best days for realty sector. The fact of the matter is that summer months are considered very productive for the real estate market. This is the time when end-users finalise property-related deals and people who are looking for rented homes shift to a new location. And if this is not enough, summer is the time when the resale market picks up with renewed dynamism,” informs Devinder Gupta, managing director of realty advisory firm, DGS Century 21. However, Nikhil Jain, CEO, Ramprastha Group, claims the real estate market remains active throughout the year. “If you are selling your flat at reasonable prices and you have a good track record in terms of delivery, buyers automatically reach your doorstep to seal the deal every time, all the time,” he shares. SVP Group CEO Sunil Jindal is of the opinion that not transfers but the kids’ education fuels property resale market during summer season. “First a new

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Real estate experts say people who get good jobs outside a city or abroad sell their property within a limited timeframe

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session and then the following summer vacations add up for this change. Also, I have observed that a majority of buyers opt for projects that are closer to reputed educational institutions,â&#x20AC;? he says. Real estate experts say people who get good jobs outside a city or abroad sell their property within a limited timeframe. In fact, these people often sell their property at prices lower than the market value. Hence, April to June is the time when prospective buyers should ideally remain in touch with real estate consultants to buy good property, that too at competitive prices. Alimuddin Rafi Ahmed, managing director, ILD Developers, informs, â&#x20AC;&#x153;I know for sure that there is a huge demand for properties in residential localities around school zones during summer time. If your project is close to good school or schools, then your project would create a big mark.â&#x20AC;?

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constructions alone as the resale market for residential properties is equally big and exciting. This is typically the time of the year when the resale market gets widened and plays host to good bargains and even desperate sales. According to Gautam Dhawan of Suraj Realtors, “I have observed that the realty market gets a new lift during summer. Even when the

markets were plunging to all-time lows during economic slowdown, all was not lost during summer as buyers and sellers hit the market in a big way. Though it didn’t reach the mark one would have expected but they started coming to us early April and all of them looked serious to seal the deal, once they found a house that met their requirements.” Volume VII Issue V May 2013

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Businessman Manoj Sehgal is shifting to his new home in Ghaziabad now even though he purchased the flat around six months back. During this period, Sehgal shelled out a fat amount for his rented accommodation in Rohini, northwest Delhi. “I waited for the new academic session to take off as it is easier then. Else the study schedule of my kids would have got affected,” he puts in. According to Neeraj Gulati, managing director, Assotech Realty, “Cash-rich NRIs find summer months the ideal time to return to their roots in order to buy property in their homeland. Their search for a property also takes off during these months even though the weather isn’t conducive to them and they have a hard time braving the harsh sun. But they prefer coming here between May and July as it helps them meet their family and friends and simultaneously hunt for properties that suit their pocket. In fact, most of them don’t even mind paying slightly more for good properties.” The realty market is not about new

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HILL HOLIDAYS

UNEXPLORED SUMMER RETREATS

Asian buyers attracted by Portugal’s new visa for property investment scheme

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Property prices in Rio set to attract foreign buyers Hong Kong is most expensive place for expats to rent property Hong Kong is the most expensive location in the world to rent a high end three bedroom apartment, followed by Caracas in Venezuela, according to research. Despite a 2-3 per cent correction since this time last year, rents for an unfurnished three bedroom apartment in a soughtafter area of the city remain high, averaging US$11,550 per month, the latest accommodation data from HR professionals solutions provider shows. In Caracas, lack of suitable properties and high demand driven by a booming petroleum industry led to rents continuing to rise dramatically. New York, Moscow and Tokyo complete the list of the top five most expensive locations in the world to rent a three bedroom apartment. Globally, rental prices for a three bedroom apartment have fallen slightly from last year’s US$3,080 per month average to US$3,030. With many of the world’s major financial markets uneasy, particularly regarding the Eurozone, many rental markets have stagnated somewhat, the report reveals.

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Prime residential property rents in key cities around the world increased by 5.1 per cent in 2012, up from 3.5 per cent a year earlier, the latest global rental index shows. A tight mortgage market along with limited supply in established markets and rising property prices in emerging markets pushed many wouldbe buyers into rental accommodation, according to the index report from Knight Frank. Overall, the Knight Frank Prime Global Rental Index rose by 1.6 per cent in the final quarter of 2012 and by 5.1 per cent over the course of the year and now stands 20 per cent above its post-financial crisis low of the second quarter of 2009. Nairobi saw the largest increase in prime rents, rising 17.9 per cent in 2012 and since the second quarter of 2009, Hong Kong has seen the largest increase in prime rents with an upward movement of 42.2 per cent and Moscow the lowest with a rise of just 3.3 per cent.

Indian expatriates drive Dubai’s realty sector growth Indian expatriates are among the top investors in Dubai’s property market which is likely to grow 10-12 per cent this year. “Expatriates, mainly from India, Russia and Saudi Arabia, are leading the growth. Indians are among the top five investors in Dubai’s property market,” said Ziad El Chaar, managing director of Dubai-based Damac Properties. He said Dubai’s real estate sector witnessed around 10 per cent growth in 2012 and this was likely to further accelerate this year. Dubai’s property market crashed in 2008-09 due to liquidity problems arising out of the global financial and economic crisis. The market witnessed negative or zero growth between 2008 and 2011. “The liquidity situation has improved and the perception is also changing. People are now bullish on the real estate market. The good thing is that we are witnessing organic growth. Real investors are coming into the market,” Chaar said. According to data compiled by Saudi Arabia-based Samba Financial Group, prices of mid-range villas and apartments in Dubai increased by 20-30 per cent in January year-on-year.

Property prices in the popular Brazilian city of Rio have skyrocketted in recent years. This indicates that foreign buyers are seeing the city as a real estate investment opportunity. Brazil’s strong economic performance prompted a strong real and increased confidence, encouraging Brazilian banks to lend money to consumers. Combined with a growing international interest and increased security due to the FIFA World Cup and the Olympics, Rio rapidly turned into both one of the most expensive and most desirable cities to live in. As the bubble of confidence expanded, property prices have increased by 140 per cent on average since 2008. But by the end of 2011, there was the feeling among experts that things may have gone too far. China’s voracious appetite for Brazilian commodities showed signs of slowing, while a worryingly drop in Brazilian productivity, lower than expected GDP, significant loan defaults and higher inflation caused the government to embark on a currency war to ensure Brazilian exports remained competitive.

The decision by Portugal to follow Spain and grant visas to property investors from outside the European Union is expected to help boost the real estate market. The Portugal residency permit allows the holder to work or study and free travel in Schengen countries. The holders will have the option to apply for permanent residency after five years. There are conditions attached including buying the property before making a visa application and properties must be bought free of any charges or mortgages. There has already been considerable interest from Asian buyers, especially the Chinese, according to real estate agents and the first visa has already been granted to a business man from India who has invested in three hotels in Albufeira.

West End in London is world’s most expensive office market The latest research published by Cushman & Wakefield has declared London’s West End as the world’s most expensive office market once again after regaining the top position from Hong Kong’s Central Business District (CBD). This highlights the scarcity of quality space in London which has increased competition and consequently inflated office rents by 2 per cent in the West End to make them the most expensive in the world. Hong Kong’s CBD drops down into second place, while the Zona Sul area of Rio de Janeiro climbs from eighth last year and powers into the top three most expensive office locations in the world as a result of a 43 per cent rental increase compared to 2011. Globally, the office market witnessed prime rents rise by 3 per cent in 2012, but this was largely driven by the impressive levels of growth in South America, particularly Brazil and Colombia. However, although prime rents expanded on a global basis, many markets suffered under continuing economic uncertainty and this led to increased occupier caution. Cushman & Wakefield expects the trend of companies proactively trying to reduce office occupancy costs to continue as the overall global economic outlook remains unsure.

International Buzz

Rents for prime property in key global cities increased in 2012, latest research shows

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forthcoming events

What?

The 12th Annual Real Estate Investment World Asia When? June 25-27, 2013 Where? Marina Bay Sands, Singapore The 12th annual Real Estate Investment World Asia is the region’s largest and most established convention to showcase the strategies, personalities and companies that represent real estate investment management, development and finance. This is where institutional investors, property funds, developers and deal makers convene to discuss innovative financing vehicles, investment structures and capital raising strategies across the risk-returns and geographic spectrums for the listed and private property investment community.

What? When? Where?

Real Estate Connect San Francisco July 10-12, 2013 Hilton San Francisco Union Square

Produced by Inman News®, Real Estate Connect® is the pre-eminent event for everyone who cares about the real estate industry and where it is going. Each year, thousands of influential real estate leaders gather at Real Estate Connect to network, make deals, explore current trends and technology, and to learn how to embrace and leverage the change that surrounds our industry. Real Estate Connect celebrates its 17th year in 2013, with conferences in New York City, January 16-18 and San Francisco, July 10-12.

What? The 8th Annual India GRI 2013 When? October 3-4, 2013 Where? Mumbai, India The India GRI, Mumbai, will bring together the leading international players and national decision-makers that are driving the real estate business in India today. Like all GRI meetings, the India GRI will have no speakers and no panellists, just informal discussions in small groups, where everyone participates equally. It is a place where senior players talk to each other and build friendships in a setting devoid of selling pressure. If connecting with industry peers on topics of mutual interest is useful to you, we would be delighted to welcome you.

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